Trusts 

OR 

Industrial 
Combinations 

IN  THE 

United  States 
Ernst  von  Halle 


il^M 


THE  GIFT  OF 

MAY  TREAT  MORRISON 

IN  MEMORY  OF 

ALEXANDER  F  MORRISON 


TRUSTS 

OB 

INDUSTRIAL   COMBINATIONS   AND 
COALITIONS 

IN  THE    UNITED   STATES 


■1h;?y^. 


f 


TRUSTS 

OB 

INDUSTRIAL   COMBINATIONS  AND 
C0.4LITI0NS 

IN   THE   UNITED   STATES 


BY 

ERNST  VON   HALLE 


THE  MACiMILLAN   COMPANY 

LONDON:  MAC.MILLAN  &  CO.,  Ltd. 

1899 

All  rights  rturvecL 


Copyright,  1895, 
By  MACMILLAN  AND  CO. 


Set  up  and  electrotyped  February,  1895.      Reprinted  January, 

B96 ;  April,  1899. 


Nortoool)  ISrfSS 

J.  S.  Gushing  &  Co.  —  Berwick  &  Smith 
Norwood  Mass.  U.S.A. 


01 

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MORITZ    MEYERSBERG 

OF    HAMBURG 
5  IN    ALL    GRATITUDE 

2  DEDICATED 

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CONTENTS. 


Introduction 


CIIAI'TER 

I.     Earlier  PiinT.ic  Policy  as  to  Combinations     .  1 
II.     The  Condition  of  Affairs  before  the  Inter- 
state Commerce  Law,  and  the  A\ti-Tri:st 

Legislation      .......  9 

IIL     The  Forms  of  Organization       ....  19 

IV.     The  Objects  of  Organization    ....  .SO 

V.     Nature  and  Effect  of  Trusts  ....  5:3 

VI.     The  Latest  Phase  of  Corporation  Law,  and 
its    Effect   on    the    Form    and  Nature  of 

Combinations   .......  92 

VIL     Public  Opinion  and  the  Combinations       .         .  118 

VIII.     Conclusions  ........  139 

APPENDICES. 
I.     Deed  of  the  Standaid  ( )il   Trust      ....     10;; 
IL     By-Laws  of  tlu- Standard  Oil  Trust        .       ..         .     ]7(» 

III.  Statute   of   the  .  "  Dcutsch-Ainericanische    IVtro- 

leuni  Gesellschaft  " 177 

IV.  United  States  Anti-Trust  I>aw         .         .         .         .      I'.MI 
V.     Illinois  Anti-Trust  Law 194 

vii 


VIU  CONTENTS. 

PAOE 

VI.     Amendment  to  the  Illinois  Anti-Trust  Law   .        .  198 

Via.  Illinois  Letter  of  Inquiry 203 

VII.     Texas  Anti-Trust  Law 204 

VIII.     Agreement    between   the    Wilkesbarre   Company 

and  the  Reading  Company        ....  210 
IX.     Abstract  from  Proceedings  in  Chancery  against 

Reading  Coal  Combine      .....  225 
X.     Rebate  Voucher  of  the  Distilling  and  Cattle  Feed- 
ing Company 244 

Xff.  Blank  of  Reports  on  Sales 248 

XI.     Cotton  Oil  Trust  Reorganization  Contract     .        .  249 
XII.     Charter  of  the  Distilling  and  Cattle  Feeding  Com- 
pany    260 

XIII.  By-Laws  of  the  United  States  Leather  Company   .  266 

XIV.  The  Reorganization  of  the  National  Cordage  Com- 

pany    280 

1.  Report  of  Reoi'ganization  Committee  and  Plan 

of  Reorganization    ......  280 

2.  Report  of  Accountants 292 

3.  Absorption  of  the  Security  Corporation     .         .  298 

4.  Appraisal  of  Good- Will 304 

6.  Circular  No.  2  of  the  Reorganization  Committee  306 

6.  Proposed  Modified  Plan  of  Settlement       .         .  314 

XV.     List  of  Combinations  in  the  United  States     .        .  328 

XVI.     Bibliography 338 


INTRODUCTION. 


It  has  become  customary,  within  the  last  few 
years,  to  apply  to  all  kinds  of  industrial  combina- 
tions and  coalitions  indiscriminately  the  name  of 
"trusts."  This  is  very  significant;  for  it  shows 
that  the  public  has  unconsciously  recognized  that, 
though  different  in  their  form  and  sometimes  in 
their  temporary  aims,  all  these  attempts  at  com- 
bination are  but  manifestations  of  one  underlying 
tendency.  While  theorists  still  discuss  the  advis- 
al)ility,  lawyers  attack  tlie  legality,  and  politicians 
doubt  the  constitutionality  of  the  principle  of  com- 
bination, we  learn  daily  of  the  formation  of  new 
combines  throughout  the  civilized  world.  This 
seems  somewhat  to  discredit  the  cheerful  hope- 
fulness of  the  believers  in  tlie  orthodox  teaching 
that  combinations  are  nothing  but  temporary  aber- 
ratioiis  fiom  the  natural  law  of  free  comi)rtili(»n. 
At  the  same  time  it  becomes  evident  that  mere 
legal  prohibition  has  pi'oved  neither  successful  nor 

ix 


X  INTRODUCTION. 

productive  of  any  satisfactory  results.  Men  who 
were  among  the  strongest  opponents  of  all  sorts 
of  combinations  a  few  years  ago  now  officially 
admit  them  to  be  in  certain  instances  the  lesser 
evil.^ 

But  the  way  in  which  the  discussion  has,  up  to 
this  time,  been  carried  on  before  the  public  can 
hardly  be  said  to  have  done  justice  to  the  ques- 
tion as  a  whole.  Very  few  of  the  numberless 
writers  on  trusts  have  attempted  to  treat  the  sub- 
ject from  a  more  general  and  independent  stand- 
point. Their  views,  as  will  be  shown  later  on, 
have  been  mostly  dictated  by  theoretical  reasoning, 
self-interest,  or  desire  for  popularity. 

It  must  certainly  be  disappointing  to  the  theo- 
rist, who  reasons  from  transcendental  principles, 
to  wake  up  one  day  to  find  that  he  is  left  alone  in 
the  field,  and  that  events  have  taken  a  somewhat 
different  direction  from  that  which  he  thought 
would  be  their  natural  course.     He  will  discover 

1  The  present  railroad  commissioner  of  Texas,  Mr.  Regan, 
to  whose  endeavours,  when  in  the  House  of  Representatives  in 
1886,  the  anti-pooling  clause  of  the  Interstate  Commerce  Law 
was  mainly  due,  has  recently  admitted  in  his  ofiQcial  report  that 
thorough  investigation  has  taught  him  the  advisability  of  rail- 
way pools  under  certain  restrictions  in  the  interest  of  all  parties 
concerned.  (Report  of  the  Interstate  Commerce  Commission, 
1892,  p.  51.) 


INTRODUCTION.  XI 

by  and  by  that  theories  can  be  based  only  on 
the  amplest  knowledge  of  the  facts  of  economic 
life  and  of  their  historical  development.  On  the 
contrary,  the  discnssion  that  has  taken  place 
has  already  passed  judgment  on  laissez  /aire.  Ad- 
vocates of  this  principle  certainly  fall  into  their 
own  trap  when  they  cry  out  for  restrictions 
against  things  that  have  naturally  developed,  and 
for  state  interference  to  secure  "  the  unhindered 
working  of  natural  forces." 

The  right  of  the  public  to  look  into  the  affairs 
of  the  combinations,  although  it  has  been  gener- 
ally acknowledged,  has  been  questioned  by  the 
parties  immediately  concerned.  Yet,  as  Schmoller 
says,  "  they  must  be  reminded  that  they  are  not 
violets  that  may  blush  unseen." 

To  leave  the  investigation,  discussion,  and  set- 
tlement of  the  trust  problem  in  the  hands  of  pol- 
iticians does  not  seem  to  have  proved  a  success 
in  the  United  States.  In  other  countries  it  is 
regarded  as  one  of  the  chief  duties  of  political 
economists  to  make  themselves  tlie  foremost  ex- 
perts on  the  facts  of  economic  life  and  conditions. 
Their  advice  is  more  and  more  souglit  where  there 
seems  to  be  danger  that  party  politics  and  st'lf-in- 
terest  may  lead  people  to  a  one-sided  view.  Tliis 
gives    them   a   most   important   mission    under   a 


XU  INTRODUCTION. 

system  of  popular  government,  and  has  removed, 
to  a  great  extent,  the  prejudice  existing  against 
economists  and  economic  science  in  general,  —  the 
prejudice  which  was  expressed,  for  instance,  in 
an  answer  made  by  the  Saxon  government  at  the 
beginning  of  this  century.  An  application  to  have 
a  chair  of  political  economy  established  at  the  Uni- 
versity of  Leipzig  was  declined  on  the  ground  that 
this  would  be  a  useless  expense,  as  the  political 
economist  taught  things  that  were  not  true,  and 
theories  that  had  no  application  to  real  life. 

In  Germany,  since  the  beginning  of  the  sixties, 
economists  and  other  leading  public  men,  aware 
of  their  duty  of  influencing  public  opinion,  have 
established  associations  for  the  purpose  of  dis- 
cussing the  economic  questions  of  the  day.  It  has 
become  customary  to  prepare  volumes  of  reports 
which  should  give  the  members  of  the  associa- 
tions, as  well  as  the  public  at  large,  the  most  reli- 
able information  about  the  facts  concerned.  In 
earlier  days  the  "  Volkswirthschaf tliche  Vereini- 
gung"  was  of  the  foremost  importance,  and  the 
discussions  and  opinions  of  its  members  had  a  far- 
reaching  influence  in  the  abolition  of  guilds,  the 
introduction  of  free  migration,  currency  reform, 
and  commercial  policy.  Its  standpoint  was  some- 
thing like  that  of  the  Cobden  Club.     When,  in 


INTRODUCTION.  XUl 

the  seventies,  a  reaction  was  felt  against  the  older 
economic  school  and  the  policy  which  it  advocated, 
and  when  it  appeared  that  hencefortli  the  social 
question  would  demand  the  chief  part  of  public 
attention,  the  "  Verein  fiir  Social-Politik  "  was  es- 
tablished (1872).  Its  influence  steadily  increased, 
so  that  within  about  ten  years  it  took  the  place  of 
the  older  society.  A  series  of  fifty-eight  volumes  of 
reports  and  proceedings,  covering  many  questions 
of  the  day,  had  been  already  published,  when,  in 
the  year  1892,  the  board  of  the  association  decided 
to  take  up  as  the  next  subject  "  Industrial  Com- 
binations "  in  all  countries.  Among  others,  the 
author,  then  in  Chicago,  w^as  requested,  in  May, 
1893,  to  take  part  in  the  preparation  of  the  re- 
port, and  the  United  States  were  assigned  to  him. 
After  some  eight  months  of  investigation  he  was 
able  to  submit  a  [)a})er,  which  lias  since  been  printed 
in  Volume  Lix.  of  their  publications. 

The  present  book  is  not  a  mere  translation  of 
this  essay.  A  great  deal  of  maica-ial  has  been 
omitted,  which,  though  necessary  to  the  German 
reader,  dealt  with  subjects  which  have,  of  late, 
been  sufficiently  discussed  in  the  United  States  and 
England ;  such  as  the  railway  problem  and  a  part 
of  the  legal  history  of  the  trust  (piestion.  On  the 
other  hand,  a  great  deal  of  the  remainder  has  been 


XIV  INTRODUCTION. 

rearranged  and  rewritten,  and  much  further  infor- 
mation added.  The  most  recent  literature  has 
been  taken  notice  of,  especially  the  very  interest- 
ing essay  by  Professor  Jenks  in  the  Political  Sci- 
ence Quarterly  for  September,  1894. 

An  economist  is  entitled  to  take  a  definite  atti- 
tude towards  the  subject  he  deals  with,  after  hav- 
ing investigated  it  carefully.  He  is  entitled  to 
make  his  book  a  programme  of  his  convictions ; 
but  it  seems  indispensable  that  he  should  try  to 
do  justice  as  fully  as  possible  to  all  interests  con- 
cerned, and  make  his  work  neither  a  blind  eulogy 
nor  an  acrimonious  pamphlet.^ 

The  principles  of  perspective  may  easily  apply 
to  the  intellectual  eye,  just  as  they  do  to'  the 
physical,  —  enlarge  the  near  and  prominent,  and 
make  the  background  seem  small.  According  to 
the  different  tastes  and  party  affiliations  of  the 
observer,  he  will  endeavour  to  draw  the  picture  as 
he  sees  it  or  wants  it  to  be  seen,  adjusting  the 
focus  to  group  the  lights  and  shadows  so  as  to 
harmonize  with  his  particular  purpose. 

If,  however,  one  wishes  to  obtain  an  unbiassed 

1  The  latter  objection  must  be  raised  against  H.  D.  Lloyd's 
"Wealth  against  Commonwealth,"  which  loses  considerable 
part  of  its  value  by  not  even  attempting  to  present  the  facts 
on  both  sides. 


INTRODUCTION.  XV 

impression,  one  has  to  proceed  mathematically,  and 
to  attempt  a  determination  of  the  relation  be- 
tween the  parts  and  the  whole.  For  that  purpose 
an  analytical  division  into  the  several  elements  is 
necessary;  and  then,  by  re-combining  the  various 
parts  of  the  problem,  we  may  hope  to  put  our- 
selves in  a  position  to  judge  the  phenomenon  as 
a  whole.  Let  us  ask,  then,  what  are  the  inherent 
tendencies  of  the  general  development?  W4iat 
the  product  of  a  local  and  temporary  situation  ? 
What  of  accidental  and  individual  influences? 
These  questions  must  suggest  the  outlines  of  an 
analytical  inquiry. 

There  are,  accordingly,  four  preliminary  matters 
to  be  considered. 

1.  The  general  economic  development,  which, 
growing  out  of  the  past,  influences  and  is  influ- 
enced by  the  present,  and  furnishes  the  basis  for 
the  conditions  of  the  future,  themselves  changing 
in  their  turn. 

2.  The  national  character,  to  which  it  is  due 
that  phenomena  differ  from  place  to  place,  al- 
though the  general  features  of  the  development 
are  similar. 

This  largely  conditions 

3.  Legal  relations,  which  determine  the  form 
of   the  new  phenomena,   unless   they  are   strong 


XVI  INTRODUCTION. 

enough  to  break  them  down  and  create  new  ones 
for  themselves. 

4.  Then  there  are,  lastly,  the  purely  "subjec- 
tive "  influences,  the  chance  concurrence  of  cir- 
cumstances, the  presence  or  absence  of  particular 
individuals,  which  give  their  colour  to  events. 
These  are  usually  put  in  the  foreground,  and  are 
only  too  likely  to  have  an  undue  influence  upon 
our  judgment  by  misleading  us  as  to  the  relative 
importance  of  things. 

In  his  investigation  the  author  has  been  sup- 
plied with  much  valuable  information  by  all  parties 
interested  in  this  question.  These  personal  expe- 
riences, combined  with  the  contents  of  the  books 
referred  to  in  the  bibliography.  Appendix  XVI., 
have  furnished  the  materials  of  the  sketch.  The 
author  avails  himself  of  the  opportunity,  with 
very  great  pleasure,  to  express  his  thanks  to  all 
the  statesmen,  economists,  trust-presidents  and  at- 
torneys, labour-leaders,  financiers,  merchants,  and 
lawyers  who  have  supported  him  in  his  task. 
Besides,  he  feels  especially  obliged  to  Professor 
W.  J.  Ashley,  who  has  been  so  very  kind  as  to  read 
the  proof-sheets  and  remove  the  numerous  Ger- 
manisms of  the  manuscript. 

Boston,  January,  1896. 


TEUSTS 

OR 

INDUSTRIAL  COMBINATIONS  AND   COALITIONS 
IN  THE  UNITED  STATES. 


CHAPTER  I. 

EARLIER   PUBLIC    POLICY   AS   TO   COMBINATIONS. 

In  the  United  States  the  question  of  combi- 
nations presents  a  different  appearance  from  that 
which  it  has  in  Europe,  where  guilds  and  corpor- 
ations have,  from  time  immemorial,  been  legal 
institutions.  Not  before  the  great  industrial 
changes  in  the  first  half  of  our  century  —  in 
some  countries  not  till  1807  ^  —  were  they  al)ol- 
ished.  And  this  was  at  the  time  the  necessary 
condition  for  economic  progress. 

The  constitution  of  the  United  States,  and  the 
English  law,  in  the  shape  in  which  it  was  adopted 
at   the    time  of   the  separation    from  the  mother 

1  In  certain  states  of  Germany  the  "  Gewerbeordnung  des 
Nordduutsclieu  Buiides  "  abolished  artisans'  iruild;*. 


2  INDUSTP^IAL.  COMBINATIONS. 

country,  did  not  recognize  guilds  and  combina- 
tions. The  old  English  law  of  the  eighteenth 
century  abhorred  monopolies  and  agreements  to 
control  or  restrict  the  production  and  sale  of 
goods,  or  in  any  way  to  enhance  prices.^  The 
Constitution  aimed  at  securing  equal  personal  * 
rights  for  every  one,  and  at  prohibiting  whatever 
might  be  attempted  to  cripple  them,  or  to  inter- 
fere with  the  free  transaction  of  lawful  private 
business.  It  was  drawn  up  in  the  time  of  the 
complete  predominance  of  the  "pliysiocratic"  doc- 
trines of  natural  rights,  and  the  rise  of  the  laissez 
/aire  theory.  These  ideas  penetrated  thg^  first 
rulers  of  the  United  States ;  to  this  their  actions 
bore  witness.  In  the  first  half  of  the  century, 
the  physiocratic  principles  permeated  the  whole 
of  American  public  life.  They  seemed  to  be  con- 
firmed by  experience.  Experiments  with  state 
ownership  of  banks  and  railroads,  almost  every 
extension  of  public  activity,  turned  out  disas- 
trously. A  belief  in  the  blessings  of  a  minimum 
of  government,  and  a  disinclination  for  the  inter- 
ference of  society  with  the  sphere  of  the  indi- 
vidual, was  more  widely  diffused  than  in  any 
other  country.      To  forbid   as  little  as  possible, 

1  Coke,  "On  Monopolies." 


EARLIER   PUBLIC   POLICY.  tJ 

and  to  regard  what  was  not  forl)idde]i  as  silently 
permitted,  to  consider  a  right  once  granted  as 
irrevocable  :  these  were  the  principles  on  which 
public  opinion  was  built.  The  device  of  free 
competition  partook,  in  the  eyes  of  the  people,  of 
the  character  of  an  eternal  holy  truth,  remote 
from  the  influence  of  time  and  economic  con- 
ditions. Whoever  disregarded  it  was  eo  ipso 
wrong;  his  actions  were  "against  public  policy." 
And  for  some  time,  imblic  o])inion  seemed  to 
be  justified.  For,  what  the  energetic  children  of 
the  Anglo-Saxon  race,  with  their  inborn  sense 
of  individuality,  active  strength,  and  ccoiiomie 
ability,  achieved  by  free  self-conscious  labour,  is 
most  remarkable.  Advancing  the  work  of  civili- 
zation from  place  to  ])lace,  the  individual,  look- 
ing out  merely  for  liis  own  self-interest,  brought 
about  a  gain  for  the  connnunity;  especially  since 
a  steady  stream  of  emigration  rejuvenated  the 
country's  blood,  ke.})t  tlie  people  informed  about 
European  progress  in  invention  and  lliouglit,  and 
provided  ample  lields  for  the  wants  of  fresh  pio- 
ductive  labour.  If  a  town  was  overcrowded  w  ilh 
tailors  or  shoemakers  or  smiths,  these  avaihd 
themselves  of  tlu'  o[)i)ortunily  of  western  expedi- 
tions, to  seek  new  homes  where  they  were  sure  to 
find  a  proiitable  and  growing  trade. 


4:  INDUSTRIAL  COMBINATIONS. 

The  building-  of  railroads  in  the  eastern  states 
seemed  still  further  to  brighten  the  prospect.  By 
improved  means  of  transportation,  artisans  were 
enabled  to  largely  extend  their  field  of  trans- 
actions, and,  at  the  same  time,  by  the  gradual 
introduction  of  machinery,  their  scale  of  produc- 
tion.    They  become  manufacturers. 

But  with  the  extension  of  the  railway  system 
a  new  problem  arose.  Centres  of  production  grew 
up,  which  very  soon  destroyed  local  industries, 
and  acquired  control  of  the  supply  of  vast  terri- 
tories. Consequently,  that  paragraph  of  the  con- 
stitution which  vests  in  Congress  the  power  of 
regulating  interstate  commerce  became  of  unex- 
pected importance. 

In  all  his  undertakings  the  American  is  an  en- 
thusiast. In  this  case,  also,  he  took  a  very  opti- 
mistic view.  With  that  zeal  which  accompanies 
him  throughout,  he  set  up  manufactories  wherever 
the  conditions  seemed  fairly  favourable.  About 
his  neighbour's  doings  he  did  not  trouble  himself. 

All  over  the  country  there  is  a  peculiar  ten- 
dency to  generalize  and  to  jump  at  far-reaching 
conclusions,  —  a  tendency  which  the  geographer 
Ratzel  has  so  brilliantly  explained  by  the  physical 
conditions  of  the  country  with  its  boundless  areas 
and  magnificent   distances.     It   is  the  necessary 


EARLIER   PUBLIC   POLICY.  5 

counterpart  to  tlie  American  spirit  of  specializa- 
tion and  adaptability  to  given  circumstances. 
Therefore,  the  general  belief  was  that  the  true 
public  welfare  depends  upon  a  continuous  in- 
crease of  production,  and  upon  a  utilization  of  all 
natural  resources  to  the  utmost  of  technical  possi- 
bility. "  The  more  we  produce,  the  cheaper  we 
can  sell  ;  the  larger,  therefore,  the  consumption. 
An  increase  in  the  demand  provides  more  hands 
with  Avork,  with  higher  wages,  and  consequently 
results  in  a  further  rise  in  the  consuming  capacity 
of  the  nation  ;  and  this  again  leads  to  a  further 
opportunity  for  extension  of  production,"  and  so 
forth.  Similar  ideas  were  upheld  in  the  courts  of 
the  coiuitry.  They  were  not  inclined  to  follow 
the  example  given  by  the  English  Bench,  which,  in 
tAvo  well-known  decisions,  had  extended  the  prin- 
ciple of  lalssez  faire  so  far  as  to  remove  the  old  re- 
strictions of  common  law^  upon  combinations  and 
upon  "forestalling,  enhancing,  regrating,  and  en- 
grossing." 2     From  the  days  of  Adam  Smith,  wlio 

1  Most  of  the  older  statutes,  especially  5  and  (5  Kd.  VI.  c.  14, 
had  already  been  abolished  by  6  George  I.  c.  18-28,  and  12 
George  I.  c:  71. 

2  S.  C.  T.  Dodd,  "  Present  Legal  Status  of  Trust.s"  :  ]]'.  ]]'. 
Cook,  "Treati.se  on  Stock,  Stockholders,  and  General  Corpora- 
tion Law,"  3d  ed.  ;  A.  Abbott,  "  Condition  of  the  Law  as  to 
Combinations," 


b  INDUSTRIAL   COMBINATIONS. 

had  compared  "  the  popular  fear  of  forestalling  " 
with  "•  the  popular  terrors  of  witchcraft,"  public 
opinion  had  inevitably  gone  in  this  direction. 
Subsequently,  in  1844,  Parliament  recognized  the 
altered  conditions  by  abolishing  definitely  all  re- 
strictive legislation  in  this  direction,  except,  of 
course,  the  general  restrictions  of  common  law  as 
to  offences  against  public  policy. 

But  in  the  United  States  the  tendency  of  public 
policy  itself  was  different.  The  democratic  theory 
would  not  admit  that  the  creation  of  classes  or  of 
a  firm  economic  organization  could  in  any  case  be 
beneficial.  And  further,  the  lack  of  governmental 
power  and  authority  made  the  rise  of  combinations 
a  much  greater  menace  to  the  fundamental  demo- 
cratic policy.  Therefore  the  courts  did  not  adopt 
the  English  precedents.  They  u})held  the  validity 
of  the  unchanged  common  law  and  statutory 
restrictions;  occasionally  even  of  some  repealed 
in  England  before  the  time  of  the  separation.  ^ 
Vet,  of  course,  all  this  meant  a  violation  of  the 
principle  of  laissez  faire.  We  can  divide  the 
decisions  into  four  groups  : 

1.  Cases  where  the  parties  to  a  combination  liad 
not  fulfilled  their   agreements   with  one  another. 

1  Bishoj),  "  On  Criminal  Law,"  sec.  527. 


EARLIER   PUBLIC   POLICY.  7 

Here  the  court  declined  to  protect  those  who  con- 
sidered themselves  damaged  thereby,  whether  it 
were  that  a  member  sued  the  combination  or  the 
combination  prosecuted  a  member.  Agreements 
of  this  sort  were  declared  illegal  and  void.  "  Illegal 
agreements  do  not  exist  before  the  law  ;  the 
court  leaves  the  parties  where  they  are."^ 

2.  Cases  where  a  party  to  a  transaction  sought 
to  have  it  annulled.  Here  also,  the  court  refused 
to  interfere. 

3.  Cases  where  outsiders  felt  damaged  and 
brought  suit.  Here  the  combinations  were  de- 
clared illegal  by  the  courts,  and  occasionally  sum- 
moned to  dissolve  ;  but  this  has  never  been  of 
much  practical  effect. 

4.  Cases  where  the  public  prosecutor  proceeded 
in  the  name  of  the  people  against  the  combina- 
tion or  the  parties  constituting  it.  As  we  shall 
see  later,  such  proceedings  usually  came  to  nothing. 

The  decisions  of  earlier  date  very  often  refer 
to  questions  of  principle  in  connection  witli  our 
pro])lem,  and  explicitly  base  themselves  ujjon  the 
above  views  ;  whilst,  as  will  be  seen,  to-day  most 
of  them  avoid  this  carefully,  and  draw  their  argu- 
ments from  formal  points  and  questions  of  fact. 

1  Cases  in  Cook,  "Stock,  Stockholders,  etc.,"  3d  ed.,  pi). 
642-5L 


8  INDUSTRIAL  COMBINATIONS. 

Before  the  beginning  of  the  war  there  were 
not  yet  many  symptoms  in  public  life  to  fore- 
shadow the  great  change  which,  in  consequence 
of  a  new  economic  development,  was  bound  to 
make  its  appearance.  We  only  learn  of  a  few 
attempts  at  combination, ^  e.g.  in  the  anthracite 
coal  trade  of  Pennsylvania,  in  the  telegraphic 
service,  and,  above  all,  in  the  eastern  railroad 
business. 

^  Spelling,  "On  Trusts  and  Monopolies." 


THE   CONDITION    OF    AFFAIRS. 


CHAPTER   II. 

THE  CONDITION  OF  AFFAIRS  BEFORE  THE  INTER- 
STATE-COMMERCE LAW,  AND  THE  ANTI-TRUST 
LEGISLATION. 

The  civil  war  closed  the  first  great  period  of 
United  States  history.  Its  result  secured  the 
contiiiuance  of  political  union  and  the  equal  status 
of  all  its  iiilial)itants.  The  extension  of  the  rail- 
way system,  within  the  next  two  decades,  brought 
the  closer  tie  of  economic  union,  which  alone 
makes  a  country  a  state,  by  adding  to  tlie  legal 
freedom  of  trade  tlie  practical  possibility.  This 
second  jjcriod  came  to  an  end  soon  after  1880. 
Whatever  railway  building  may  l)e  done  in  future 
between  the  Mexican  and  the  Canadian  Pacific, 
will  he  '■'' intensive  "  work  after  the  ''extensive'"  is 
practically  completed. 

During  the  progress  of  railroad  ])uilding,  the 
manufacturers  soon  became  aware  that  the  great 
hopes  of  tlie  new  era  would  not  all  ]tv  realized. 
Everybody  had  increased  his  production,  regard- 
less of  the  needs  of  the  market  ;  and  whilst  he 
victoriously    entered    the    boundaries    of    distant 


10  INDUSTRIAL   COMBINATIONS. 

zones,    a   foreign   competitor    had   attacked  him 
within  the  range  of  the  domestic  hearth. 

The  crisis  all  over  the  world,  from  1873  to 
1877,  clearly  displayed  the  harmful  accompani- 
ments of  modern  industrial  methods:  suffering 
industries,  and  complaints  about  over-production 
and  under-consumption.  Public  opinion  was 
startled;  and  up  to  the  present  it  has  not  fully 
understood  what  are  the  reasons  and  remedies  for ' 
that  unexpected  result,  and  why,  ever  since,  our 
entire  industrial  system  has  been  placed  under 
the  strain  of  a  continuous  excitement;  long  crises 
following  each  other  with  increasing  rapidity  after 
short  periods  of  temporary  prosperity. 

Business  interests,  meanwhile,  tried  to  relieve 
themselves  in  their  own  way.  The  remedy  was 
sought  in  combination,  —  a  realization  of  the  re- 
mark of  Stephenson  :  "Where  combination  is 
possible,  competition  becomes  impossible,"  which 
President  Andrews,^  fifty  years  later,  expressed  in 
the  still  more  significant  words :  "  The  day  of  old- 
time  competition  has  set.  Law  or  not  law,  capital 
will  henceforth  march  mostly  in  phalanxes." 

It  was  but  natural  that  business  men,  seeing 
that  as  individuals  they  were   powerless  against 

1  "Trusts  according  to  Official  Investigations,"  p.  20. 


THE   CONDITION    OF   AFFAIKS.  11 

circumstances,  tried  to  meet  the  danger  hy  asso- 
ciating in  "Pools";  for  they  could  not  perceive 
any  other  way  of  relief.  The  law,  however,  did 
not  recognize  the  legality  of  these  unions.  There- 
fore the  '-  Tools "  were  soon  found  to  be  insuffi- 
cient. It  was  the  genius  of  John  I).  Rockefeller 
which  suggested  a  new  and  more  promising  sys- 
tem. We  may  rightly  ascribe  to  his  initiative 
the  actual  beginning  of  tlie  new  period,  and  tlie 
first  steps  towards  an  industrial  reorganization. 

The  early  history  of  the  Standard  Oil  combi- 
nation is  known  throughout  the  country.  Several 
public  investigations  liave  brought  to  light  the 
devices  by  which  the  poor  teamster,  who  in  1865 
started  with  a  friend  a  small  oil  refinery,  within  a 
few  years  acquired  control  of  the  entire  oil  trade 
of  tlie  country.  He  was  able  to  secure  special  rates 
of  transportation  with  the  help  of  some  l)ril)ed 
railroad  freight  agents.  Soon  he  became  jiower- 
ful  enongli  to  dictate  arbitrary  terms  to  the 
I'aili'oiuis  tlirougli  the  "  Sontliri'ii  Iniprowment 
('oini)any,"  and  when  this  was  deelared  illegal, 
tlirongh  the  eond)ination  of  the  several  state 
Staiidai'd  Oil  e()m[)anies.  The  subsefpient  build- 
ing of  the  pipe  line  system  and  the  li]<e.  we  do  not 
need  to  go  into  at  this  place. ^ 

^  See  the  different  investigations,  and,  in  tlic  bibliography,  the 


12  INDUSTRIAL   COMBINATIONS. 

The  formal  luiioii  was  actually  completed  with 
the  establishment  of  the  Standard  Oil  Trust  in 
1882.1  But  this  was  a  mere  formality,  as  the 
trade  was  already  monopolized  long  before.^ 

The  apparent  success  of  the  Standard  Oil 
Trust  gave  a  vigorous  stimulus  to  the  consolidat- 
ing movement.  A  number  of  other  trusts  were 
formed  on  the  same  general  lines,  —  for  the  manu- 
facture of  sugar,  whiskey,  lead,  cotton  oil,  linseed 

special  references  to  the  Standard  Oil  Company.  A  very  good 
record  of  the  development  of  the  petroleum  industry  is  given  in 
the  recent  report  of  the  Bureau  of  Statistics  of  Pennsylvania: 
A.  S.  BoUes,  "  Petroleum,  its  Production  and  Products,"  which 
of  course  does  not  mention  the  trust  controversy. 

1  Forthis  see  H.  D.  Lloyd  "  Wealth  against  Commonwealth," 
which  is,  however,  only  a  chromque  scanclaleiise. 

2  Therefore  Jenks'  criticisms  of  Aschrott  do  not  seem  to  me 
to  be  completely  justified  ;  the  former  attributes  perhaps  a  little 
too  much  importance  to  the  formality  of  the  establishment  of  a 
uniform  trust.  The  prices  were  already  before  that  time  con- 
trolled by  the  Rockefeller  interest.  As  to  other  price  statistics 
given  by  Jenks,  a  comparison  seems  to  be  desirable  with  the 
prices  of  the  same  articles  and  the  raw  materials  they  consist 
of  in  the  markets  of  other  countries,  where  they  are  not  manip- 
ulated, and  with  the  entire  movement  of  wholesale  prices  for 
other  articles  in  the  United  States  during  the  same  period  ;  and 
even  then  the  price  question  is  rather  doubtful,  because  the  fig- 
ures as  given  in  the  papers  or  published  by  the  parties  interested 
will  be  very  often  found  quite  misleading.  IVIanagers  of  the 
trusts  have  frequently  told  the  author  that  the  public  statements 
do  not  always  tally  with  the  actual  transactions,  and  that  the 
largest  sales  are  made  very  often  ou  quite  different  terms. 


THE   CONDITION         '   AFFAIRS.  13 

oil,  starch,  etc.  The  securities  of  the  combines 
were  introduced  on  the  stock  exchanges.  Soon 
they  wielded  a  powerful  influence  over  the  Avhole 
of  business.  But  their  appearance  was  by  no 
means  universally  looked  upon  in  a  cheerful  mood. 
Competitors,  who  either  had  not  been  able  to 
secure  admittance  under  satisfactory  terms,  or 
had  not  been  willing  to  give  up  their  indepen- 
dence, and  to  entrust  their  property  and  interests 
to  the  promoters  of  the  new  schemes,  arose  every- 
where in  opposition.  Producers  of  raw  materials, 
used  by  the  combinations,  felt  uneasy,  now  that 
they  faced  only  one  strong  buyer  instead  of  many 
competitors  for  purchase.  Retailers  and  con- 
sumers felt  the  effect  of  a  new  regime  in  the  sup- 
plies of  certain  goods.  On  the  exchanges  the 
rapid  increase  of  huge  quantities  of  stocks,  rather 
doubtful  in  their  value,  provoked  a  good  deal  of 
distrust  and  anxiety.  The  whole  public  was  dis- 
turbed by  the  incessant  news  of  "•deals"  l)etween 
combinations  and  I'ailroad  com[)anies,  legislators, 
and  even  the  judiciary. 

In  railroad  affairs,  tilings  had  become  so  unbear- 
able that  in  1885  Congress  gave  uj)  its  former 
attitude  of  non-interference  with  private  matters. 
After  two  years  of  investigation  and  deliberation, 
the  Interstate  Commerce   Act    was  passed.     The 


14  INDUSTRI.        COMBINATIONS. 

facts  in  connection  with  this  part  of  the  problem 
have  been  discussed  so  often  in  this  country 
within  recent  years,  that  there  is  hardly  any 
need  of  repeating  them  here.^  The  two  most  im- 
portant pomts  for  our  purpose  in  the  law  which 
was  finally  passed  are  the  prohibition  of  all  dis- 
criminating rates  and  the  forbidding  of  railway 
pooling,  —  though  a  majority  of  the  Senate  was 
strongly  opposed  to  the  latter  clause. 

The  interstate  commerce  investigation  revealed 
much  that  was  new  about  the  character  and  tac- 
tics of  the  industrial  combinations,  and  led  in  con- 
sequence to  demand  for  governmental  action.  In 
the  state  of  New  York,  Tammany  Hall  established 
an  anti-trust  agitating  committee,  and  in  numer- 
ous addresses  its  leaders  demanded  energetic  meas- 
ures against  the  fleecers  of  the  people. 

Newspapers  daily  devoted  columns  to  the  gather- 
ing of  alleged  facts  about  trusts.  The  latter 
had  carefully  avoided  a  publication  of  their  deeds, 
and  kept  their  methods  and  objects  in  absolute 
darkness.  Even  the  certificate  holders  were  not 
allowed  an  inside  view;  they  did  not  know  the 
text  and  meaning  of  that  agreement  upon  which 

1  Vide  the  publications  of  Sticknet/,  Hadley,  Congressional 
Documents  in  Connection  with  the  Interstate  Commerce  Act, 
1885-87,  etc. 


THE  CONDITION   OF  AFFAIKS.  15 

the  exchange  of  their  former  stocks  in  the  different 
companies  for  the  new  trust  securities  was  based. 
In  the  first  edition  of  his  Trusts  Cook  gives  a  fair 
statement  of  the  general  feeling  as  to  trusts,  before 
detailed  information  was  accessible.  He  helps  us 
to  understand  why  the  resolutions  of  the  New 
York  Senate  and  of  the  Federal  House  of  Repre- 
sentatives to  create  committees  for  an  investigation 
into  trusts  met  with  tlie  most  hearty  approval  on 
the  part  of  the  people. 

Their  principal  results  have  been  set  forth  in 
many  publications;  the  best  of  which  are  the 
article  of  President  Andrews  in  the  Political 
Science  Quarterly^  the  second  edition  of  Cook's 
Trusts^  and  the  same  author's  Corporation  Prohlem.^ 

A  storm  had  arisen  against  everything  that 
smelled  of  combination  ;  newspapers  and  pam- 
phlets vied  with  each  other  in  denouncing  them  as 
the  root  of  all  the  evil  experiences  of  the  past. 
Vigorous  cri(;s  were  lieard  for  severe  legislation. 
It  lias  nevcrtliclcss  been  stated,  witli  some  ap[)ear- 
aiicc  of  justice,  that  not  all  the  parties  were 
e(iually  sincere  in  their  denunciations,  and  that 
the   most  zealous  of  them   were   not  always  the 

'  J.  W.  Jciiku'  muuoiiiapli  ou  the  early  history  ami  growth 
of  the  Whiskey  Trust  is  to  be  noticed  as  the  beat  mouograph 
about  an  individual  trust. 


16  INDUSTRIAL   COMBINATIONS. 

best  elements  of  the  community,  and  did  not  act 
from  mere  unselfishness.  "  Ward  politicians  of 
the  baser  sort  have  mostly  been  noisiest  in  their 
denunciations  to  make  something  for  themselves 
out  of  them.''  ^ 

Numberless  bills  were  filed  with  the  different 
legislatures  during  the  next  few  years,  —  from 
three  to  five  in  every  state.  They  aimed  at  for- 
bidding every  kind  of  combination  or  coalition  for 
the  purpose  of  checking  competition,  raising  prices, 
and  so  forth. ^  Eighteen  of  them  threatened  the 
following  punishments  : 

Whosoever  acted  against  the  provisions  of  the 
laws  should  be  fined  from  -15000  to  110,000,  and 
imprisoned  from  five  to  ten  years.  Payments 
could  not  be  collected  or  afterwards  recovered. 
Directors  of  a  corporation  committing  the  above 
crimes,  all  stockholders,  officers,  agents,  and  attor- 
neys, should  be  guilty  of  conspiracy  and  liable  to 
imprisonment. 

1  G.  F.  Beach,  Jr.,  "Facts  about  Trusts,"  Forum,  Septem- 
ber, 1890,  p.  70.  This  remark  does  not  seem  unjustified ;  tlie 
author  learned  from  a  perfectly  reliable  source,  that,  in  the 
New  York  Senate  investigation,  one  of  the  trusts  was  offered 
relief  from  the  investigation  by  the  secret  payment  of  $7500 
to  Tammany  Hall  men. 

2  S.  C.  T.  Dodd,  "Shall  all  business  co-operation  be  ren- 
dered criminal  ?  "  A  statement  of  pending  legislation  and  its 
consequences. 


THE   CONDITIOX'  OF   AFFAIRS.  17 

With  a  desire  to  achieve  popularity,  many 
legishitures  passed  some  sort  of  bill.  By  the 
end  of  1894  the  federal  government,  twenty-two 
states  and  one  territory,  had  enacted  anti-trust 
laws.  The  first  provision  in  this  direction  was 
introduced  into  the  Constitution  of  Georgia  in 
1877  :  "  The  General  Assembly  shall  have  no 
power  to  authorize  any  corjjoration  to  make 
any  contract  or  agreement  whatever  with  any 
(other)  corporation  which  may  have  the  effect, 
or  be  intended  to  have  the  effect  to  defeat  or 
lessen  competition  in  their  respective  business, 
or  to  encourage  monopoly  ;  and  all  such  contracts 
or  agreements  shall  be  illegal  or  void."  This  was 
of  course  not  originally  directed  against  trusts 
but  against  railroads,  but  it  could  afterwards  be 
readily  applied  to  trusts.  Anti-trust  laws  were 
passed  in  1889  by  Kansas,  Maine,  Michigan,  Mis- 
souri, Nebraska,  N.  Carolina,  Tennessee,  Texas, 
and  the  territories  of  Idaho,  Montana,  and 
N.  Dakota  ;  and  the  new  states  of  Washington 
and  Wyoming  introduced  provisions  in  this  direc- 
tion into  their  constitutions.  In  1890  anti-trust 
laws  were  passed  by  Iowa,  Kentucky,  Louisiana, 
]\Iissouri,  and  S.  Dakota.  In  1891  Kentucky  and 
Missouri  introduced  provisions  into  their  con- 
stitutions.    In  the  same  year  Alabama,  Illinois, 

0 


18  INDUSTRIAL   COMBINATIONS. 

Minnesota,  and  the  territory  of  New  Mexico ;  in 
1892  New  York  and  Wisconsin  legislated  to  a 
like  effect ;  while  in  1893  California  forbade  com- 
binations in  live  stock,  Nebraska  in  coal  and 
lumber.  Amendments  to  these  laws  were  passed 
in  Missouri  and  Tennessee  in  1891  ;  Louisiana  in 
1892  ;  Illinois,  Minnesota,  and  South  Dakota  in 
1893.  The  United  States  act  was  passed  in  1891, 
and  the  Tariff  Act  of  August,  1894,  makes  some 
general  provisions  of  the  same  character  as  to  the 
regulation  of  prices.^  No  anti-trust  legislation 
was  passed  in  1894  in  the  several  states. 

Before  we  go  into  details,  an  examination  of 
the  character  of  the  different  forms  of  organiza- 
tion seems  advisable,  because  we  shall  see  that  the 
effects  of  legislation,  as  far  as  there  have  been 
any,  have  been  felt  only  on  the  surface. 

1  F.  H.  Cooke,  "Economic  and  Anti-Economic  Legislation." 


THE  FORMS   OF   ORGANIZATION.  19 


CHAPTER   III. 

THE   FORISIS    OF   ORGANIZATION. 

The  United  States  have  gradually  become  cov- 
ered with  a  network  of  different  combinations 
and  coalitions.  These  can  be  grouped  in  various 
classes  corresponding  to  their  objects  and  ends. 
In  view  of  the  large  number  of  species,  which 
in  infinite  variety  adjust  themselves  to  the  special 
purposes  of  every  case,  we  can  only  consider  the 
principal  ones. 

I.    More  or  less  amorphous. 

(a)  Associations  of  men  who  are  interested  in 
the  same  line  of  business,  for  certain  general  pur- 
poses, without  altering  the  conditions  of  competi- 
tion, i.e.  national,  state,  or  local  associations  for 
the  protection  of  special  interests.  Sucli  are  the 
"Brewers'  National  ( "ouveutioii/"  wliit'li  occiision- 
ally  collects  money  to  influence  the  elections,  or 
to  pacify  the  legishitures,  —  es})ecially  wlion  un- 
favouriible  taxation  or  tem})eran('e  laws  an'  imiiii- 
nent.  Similar  assoc-iatiojis  exist  in  all  hiaiidics  of 
the  li(pu)r  tratlic,  among  the  huUiicrs  (^Butchers' 


20  INDUSTRIAL   COMBINATIONS. 

National  Protective  Association),  the  bankers 
(Bankers'  National  Convention),  among  travel- 
ling salesmen,  hotel  men,  actors,  teachers,  etc. 
In  some  instances  aid  and  invalid  funds,  life 
policies,  or  pensions  for  widows  and  orphans  are 
features  of  the  unions ;  and  these  form  an  impor- 
tant part  of  their  programme  whenever  the  words, 
"mutual,"  "protective,"  or  "provident"  occur  in 
the  title. 

(6)  Associations  in  which  besides  the  above- 
mentioned  features,  there  are  regulations  con- 
cerning trade  customs,  listings,  and  quotations, 
or  scales  of  prices.  Again,  the  brewing  industry- 
is  very  instructive.  In  the  year  1886,  the  brewers 
of  the  Northwest  entered  upon  an  agreement 
as  to  the  normal  price  of  beer,  and  concerning  re- 
bates to  the  trade.  They  fixed  the  prices  in  the 
saloons.  In  Cincinnati,  at  one  time,  they  installed 
agents  on  common  account,  who  opened  bar-rooms 
to  compete  with  some  disobedient  customers,  and 
who  sold  beer  more  cheaply  to  the  public,  with 
the  intention  of  crushing  the  offenders.^  The 
.  Brewers'  Associations  of  Chicago  and  New  York  de- 
termine the  kinds  and  limitations  of  rebates  to  be 
granted  to  retailers  ;  they  restrict  those  "  treating  " 

1  Collection  of  newspaper  clippings  by  Mr.  H.  D.  Lluyd. 
Letter  B. 


THE   FORMS   OF   ORGANIZATION.  21 

expenses  of  tlie  drivers,  which  were  customarj 
upon  delivery  of  beer  at  the  restaurants ;  they 
limit  the  presents  to  customers,  such  as  beer,  ice- 
boxes, pictures,  etc. ;  pledge  themselves  to  cut 
down  advertising,  and  the  like.  Allied  against 
them  we  find  in  New  York  the  "  Wine,  Liquor, 
and  Beer  Dealers'  Central  Association."  It 
demands  that  non-members  shall  not  be  ac- 
commodated by  the  brewers.  When  they  were 
disregarded,  they  started  a  co-operative  establish- 
ment of  their  own,  the  "  New  York  Consumers' 
Brewery." 

Much  more  important  for  the  whole  country  is 
the  centralization  of  cattle  and  meat  dealing  in 
Cliic-ago,  momentous  enough  to  justify  a  special 
investigation  1  in  1889-90.  Though  this  did  not 
reveal  a  formal  union  of  the  large  Chicago  pack- 
ers, it  was  demonstrated  tliat  heavy  pressure  on 
the  railroads  and  owuersliip  of  the  Chicago  stock- 
yards on  the  oiu;  hand,  ''friendly  agreements"  on 
the  other,  had  resulted  in  an  effective  control 
of  the  whole  market.  Armour,  Swift,  INIorris 
Nelson,  and  Hammond  rule  tlie  cattle  and  meat 
market  of  llic  (duiitry.  rhey  conduct  their 
lousiness    individnally.    l)u(     jointly    they    fix    the 

1  U.  S.  Senate  Keport,  No.  829,  51st  Congress,  second  session, 
May  1,  18'J0. 


22  INDUSTRIAL   COMBINATIONS. 

prices  for  the  purchases  of  cattle  and  sales  of 
meat  in  the  markets  of  Chicago,  Kansas  City, 
and  Omaha.  They  annihilate  independent  butch- 
ers by  cheaper  sales  through  their  own  agents.  ^ 
They  determine  the  daily  market  price  of  cattle. 
If  the  seller  refuses  to  take  the  first  bid,  he  is 
generally  forced  to  accept  a  lower  one  ;  the 
purchasing  agents  are  instructed  never  to  overbid 
each  other.  The  principals  themselves  are  in  con- 
stant communication  with  each  other,  and  decide 
the  evening  before  what  shall  be  the  tendency  of 
the  morrow's  market.  They  have  an  agreement 
not  to  interfere  with  each  other  in  certain  markets 
and  localities.  They  bid  jointly  for  public  con- 
tracts, and  ruin  those  who  dare  to  appear  against 
them. 

There  has  been  much  talk  about  a  league  of 
the  same  sort  in  the  milk  trade  ^  of  New  York. 
An  association  of  milk  wholesalers  lias  established 
a  so-called  Milk  Exchange  ;  and,  though  only 
joined  by  a  majority  of  the  tradesmen,  it  estab- 
lishes the  prices  for  the  entire  business.  The 
farmers  in  the  neighbourhood  Avere  unsuccessful 
in  an  attempt  to  resist  their  alleged  arbitrariness 
by  means  of  an  association. 

1  Ibid.  p.  6  ;   "  Testimony,"  p.  481. 

2  See  N.  Y.  Senate  iuvestiKation. 


THE   FORMS    OF   ORGANIZATION.  23 

The  Exchanges  of  the  country  are  closed  corpo- 
rations. They  regulate  the  standard  of  quality  of 
articles  dealt  in,  the  admittance  of  securities  to 
dealings  and  listings,  the  terms  of  payment,  the 
forms  of  transaction,  the  methods  of  clearing  ;  oc- 
casionally they  forbid  certain  practices,  as  recently 
the  arbitrage  business  at  the  New  York  Stock 
Exchange.  Their  directors  (governors)  act  as 
arbitrators  among  members,  and  have  jurisdiction 
as  to  their  moral  conduct  in  business.^ 

To  this  same  group  belong,  in  a  way,  physi- 
cians and  lawyers.  They  serve  their  common 
interest  in  boards,  academies  of  medicine,  and 
associations  of  the  bar.  They  have  general  scales 
of  prices ;  their  competition  is  limited  by  "  profes- 
sional courtesy";  and  the  lawyers  sit  in  courts  of 
honour  in  cases  of  unprofessional  conduct. 

(c)  Associations  where  the  parties  hold  regular 
meetings  to  fix  prices,  and  to  decide  upon  the 
output,  or  aj)p()int  cctuimon  agents  to  market  the 
product.  Tills  has  for  many  years  been  cus- 
tomary witli  the  coal  trade.  The  sales  agents  of 
the  owniTs  of  the  large  anthracite  mines  meet 
once  a  montli  at  the  Fifth  Avenue  Hotel  in  New 
York,  to  lix  prices,  and  lo  allot  the  quota  of  the 

1  See  Uulos  and  Kegiilatious  of  the  various  Exchanges  in 
the  country. 


24  INDUSTRIAL   COMBINATIONS. 

output.  1  Similar  friendly  agreements  we  find  in 
the  railroad  business.^  All  these  arrangements 
approach  very  near  to  the  second  class,  and  are 
species  of  the  large  genus,  "  Pool." 

II.  Agreements  strengthened  by  a  more  formal 
or  material  tie. 

(a)  Sometimes  the  resolutions  concerning  out- 
put, quantities  to  be  marketed,  and  prices,  are 
verbally  formulated  and  put  in  writing.  To  this 
class  belonged  the  contract  between  the  petroleum 
refiners,  or  the  "  Standard  Oil  Company  of  New 
York,"  acting  as  their  representative,  and  the 
"  Oil  Producers'  Association,"  for  a  temporary 
restriction  of  the  oil  production  in  1887.^  Other 
instances  are  the  numerous  agreements  among  the 
wholesalers'  associations  concerning  the  minimum 
prices  of  sales  to  retailers.^ 

(6)  Sometimes  the  ties  are  made  closer  still 
by  the  institution  of  penalties,  or  by  the  payment 

^  There  have  been  various  investigations  of  the  coal  combines 
by  the  state  of  Pennsylvania  in  1833,  1858,  1871  ;  by  the  federal 
government  in  1886,  49th  Congress,  report  46,  part  2  ;  in  1887- 
89,  50th  Congress,  second  session,  No.  4147  ;  in  1893,  52d  Con- 
gress, second  session,  No.  2278. 

2  Cf.  Reports  of  the  Interstate  Commerce  Commission,  sec- 
tions on  classification. 

3  See  U.  S.  House  investigation  on  Standard  Oil  Trust,  1889, 
July  30. 

*  Andreics,  "Trusts  according  to  Oificial  Investigation,"  p.  6. 


THE   FORMS    OF   ORGANIZATION.  Zb 

of  a  share  of  the  earnings  into  a  common  fund 
in  order  to  secure  the  observation  of  the  agreement, 
or  for  expenditure  in  the  common  interest,  and 
hiter  redistribution  in  fixed  percentages. 

As  to  penalties,  we  have  numerous  reports  from 
the  iron  industry,  rail  combines,  and  so  on.^ 

For  the  second  case,  the  envelope  industry 
furnishes  an  illustration.  The  "Standard  Enve- 
lope Company"  of  S})ringfield,  Mass.,  is  composed 
of  a  number  of  envelope  manufacturers  who 
produce  the  majority  of  all  envelopes  for  con- 
sumption of  the  country;  its  only  powerful  com- 
petitor being  the  United  States  stamped  envelope. 
Its  capital  is  'ii'SlOO.^  On  eacli  thousand  of  manu- 
factured envelopes  every  member  pays  into  the 
c()m})any's  treasury  a  certain  sum  which  serves 
in  part  to  buy  out  competition  and  acquire  new 
patents,  and  is  in  part  redistributed  according 
to  the  respective  lioldings  in  the  company's 
stock. 3 

(c)  In  some  cases,  finally,  the  coalition  is  upheld 
by  a  system  of  premiums.  The  one  party  pledges 
itself  to  buy  only  from  the  other,  or  to  sell  excbi- 
sively  to  it ;   iu  compensation  it  receives  special 

1  See  the  Iron  Age,,  November  16,  1893,  p.  880. 

2  New  York  state  investigation. 

3  Andreios.,  p.  7,  and  ibid. 


26  INDUSTRIAL   COMRINATIONS. 

rebates.  The  "  American  Tobacco  Company  "  has 
for  a  long  while  granted  such  rebates  to  the  cigar- 
ette dealers.  The  Whiskey  Trust  grants  them  at 
this  present  time  to  its  exclusive  customers.^ 
Such  rebates  are  also  very  common  in  life  and 
fire  insurance. 

Again,  the  newspapers  of  the  country  have 
established  uniform  news  and  cable  service  by 
means  of  the  "Associated  Press,"  the  "United 
Press,"  and  their  southern  and  western  affiliated 
branches.  No  large  paper  can  exist  without 
their  accommodation,  because  separate  and  inde- 
pendent correspondence  would  be  too  costly. 
Consequently  the  associations  are  free  to  shut 
out  undesired  competitors  by  requiring  exor- 
bitant initiation  fees  from  new  applicants  for 
admission.  The  German  papers  of  San  Francisco 
a  while  ago  put  this  fee  for  a  new  German  daily 
at  $80,000  ;  whereupon  the  projector  had  to  give 
up  his  plans.  In  that  city  the  Western  Press 
Association  alone  holds  full  sway.  In  New  York 
several  companies  compete,  but  this  does  not 
iniluence  the  fees  very  much. 

Herewith  end  the  groups  which  may  rightly  be 
described  as  "  Pools." 

1  Further  evidence  gives  Andreios,  ibid.  pp.  8-10. 


THE   FORMS    OF    ORGANIZATION.  27 

III.  Combinations  which  strive  for  and  attain 
identity  ot"  all  interests. 

(a)  Cases  where  the  individual  undertakings 
are  really  or  nominally  preserved:  the  "Trusts 
proper." 

1.  Either  the  trust  is  established  by  a  transfer 
of  a  majority  of  stock  of  the  different  companies  to 
the  trustees,  in  whom  thereby  the  control  is  vested, 
and  who  issue  trust  certihcates  in  exchange ; 

2.  Or  the  total  amount  of  all  the  stocks  is 
transferred  to  tlie  trustees,  who  issue  the  trust 
certificates  whilst  the  former  owners  keep  mort- 
"•asres  to  the  extent  of  the  valuation  of  their 
factories,  and  perhaps  receive  an  additional  bond ; 

3.  Or  the  property  is  unconditionally  trans- 
ferred to  tlie  trustees,  in  return  for  the  delivery  of 
trust  certificates. 

Under  2  came  the  former  "•  Wliiskey  Trust," 
under  3  the  "Standard  Oil  Trust."  The  diver- 
gences between  the  three  forms,  \vlii(  li  fundamen- 
tally rest  upon  the  same  princijile,  are  explained 
by  the  degree  of  confidence  which  the  trustees 
enjoy.  AVhere  mortgages  are  given,  the  trust 
certificate  represents  only  the  good  will. 

(h)  Cases  (practically  differing  little  from  the 
above  "trusts")  where  the  umlertakings  them- 
selves are  consolidated  ;  either 


28  INDUSTRIAL   COMBINATIONS. 

1,  Temporarily,  l)y  lease  or  rent,  which  is 
quite  common  with  railroads,  and  also  hapj)ens 
in  all  other  branches  of  business ;  or 

2.  Permanently, 

a.  By  sale  :  a  trunk  line  buys  a  branch  line; 
one  concern  purchases  another,  and  closes  it  or 
runs  it  as  a  branch  ; 

y3.  By  complete  control  through  ownership  of 
the  stock ; 

7.  By  amalgamation:  as  the  Hecker- Jewell- 
Jones  ]\Iilling  Company  in  Brooklyn,  which 
evolved  from  three  separate  mills ;  the  New 
York  Central  and  Hudson  River  Railroad,  etc. 

S.  By  establishment  of  a  new  large  company 
which  absorbs  in  itself  all  those  already  existing. 
Some  are  then  operated  entirely  by  the  central  ad- 
ministration. To  others  a  certain  independence 
is  left  for  particular  branches  or  districts.  Still 
others  are  run  as  branch  offices  ;  others  again,  — as 
all  the  establishments  located  in  different  states, 
controlled  by  ownership  of  the  whole  or  a  majority 
of  their  stock, — are  managed  in  one  of  the  forms 
described  above.  (1  and  2  a,  ^,  7).  This  last 
group  contains  the  legal  successors  of  the  indus- 
trial trusts,  into  which  the  latter  have  been  re- 
cently transformed. 

Both   in   number   and    comprehensiveness    the 


THE   FOKMS   OF   ORGANIZATION.  29 

most  important,  by  its  control  of  entire  classes 
of  industrial  production  and  trade,  is  group  IIT., 
which  represents  the  last  and  final  phase  of  national 
centralization  for  the  control  of  particular  brandies 
of  industry.  It  means  complete  union  both  finan- 
cial and  technical  in  whole  fields  of  production. 


30  INDUSTRIAL   COMBINATIONS. 


CHAPTER   IV. 

THE   OBJECTS   OF    ORGANIZATION. 

Of  the  various  kinds  of  combination  classified 
in  the  preceding  chapter,  only  certain  groups 
need  here  be  considered.  They  are  those  in 
which  the  individual  undertakings  are  influenced 
materially  by  their  connection  with  the  combi- 
nation: in  which  quantity  of  production,  or  prices 
with  reference  to  the  scale  of  actual  earnings, 
are  the  objects  of  the  agreement. 

I.  Natural  monopolies.  There  are  commodities 
which  onl}'  exist  in  quantities  locally  limited,  or 
are  manufactured  from  materials  so  limited. 
The  ownership  of  certain  territories,  therefore, 
or  the  purchase  of  their  products,  can  easily  con- 
fer a  controlling  power  upon  certain  individuals. 
The  attempts  at  combination  in  the  production 
of  raw  materials  are  still  to  a  great  extent  em- 
bryonic ;  among  these  may  be  reckoned  the 
Rockefeller  interests  which  seek  to  monopolize 
the  mining  regions  of  Lake  Superior.  Generally 
iron  ore  is  found  in  too  many  places,  and  in  too 


THE   OBJECTS    OF    ORGANIZATION.  31 

various  forms,  even  to  offer  a  chance  for  prelim- 
inary steps  in  this  direction. 

The  same  is  true  of  bituminous  coah  A  very 
rough  understanding  about  the  quantities  to  be 
mined,  the  range  of  prices  and  wages,  had  been 
attained  in  the  Middle  states  some  time  before 
the  outbreak  of  the  crisis  of  1893.  But 
during  that  disastrous  period  it  collapsed  com- 
pletely in  the  district  west  of  the  Alleghanies. 
Some  of  the  mine-owners  attempted  to  increase 
their  production  by  a  cut  in  prices,  and  they 
indemnilied  themselves  against  the  losses  incurred 
by  a  reduction  in  wages.  After  the  end  of  the 
panic,  their  conduct  made  a  resurrection  of  the 
old  scheme  impossible,  and  was  the  principal  factor 
in  bringing  about  the  grievous  coal  strike  ill  May, 
1891:.  The  other  operators  were  not  able  to 
restore  wages  without  their  co-operation. ^  That 
no  closer  agreement  was  reached  ])revioUvsly,  is 
found  to  have  been  due  to  the  \\i(U'ly  diflusfd 
territories  in  which  bituminous  coal  is  found,  and 
the  vast  differences  of  economic  conditions  within 
them.  As  long  as  the  understanding  lasted  for- 
mally, local  divergencies  were  agreed  to  as  to 
hours  of  work  and  as  to  Avages  ;  l)ut  this  system 
was  never  thoroughly  effective. 

1  The  Nation,  May  24,  1894. 


32  INDUSTRIAL   COMBINATIONS. 

Anthracite  coal,  on  the  other  hand,  is  foiiiid 
only  in  a  very  limited  area  in  Pennsylvania  and 
the  neighbouring  states ;  the  recently  discovered 
western  coal  fields  are  too  distant  and  too  small  to 
come  into  consideration  in  the  market.  The  com- 
petition of  Nova  Scotia  is  hindered  by  high  duties 
and  bad  facilities  for  transportation,  but  would 
probably  be  of  little  consequence  in  any  case. 

Much  has  been  said  and  written  for  more  than 
half  a  century  about  combinations  in  the  anthra- 
cite coal  production;  but  a  truly  organic  union 
of  the  producers  has  not  as  yet  taken  place. 
Pools  of  one  form  or  another  existed  for  many 
years.  The  anthracite  region  is  covered  by  a 
number  of  large  railway  systems :  the  Phila- 
delphia and  Reading ;  the  Lehigh  Valley ;  the 
New  Jersey  Central ;  the  Pennsylvania  ;  the  Dela- 
ware and  Lackawanna  ;  the  New  York,  Lake  Erie, 
and  Western ;  the  New  York,  Susquehannah,  and 
Western ;  and  the  New  York,  Ontario,  and  AVest- 
ern.i  The  annual  capacity  amounts  to  50,000,- 
000  tons ;  the  actual  output  averages  hardly  over 


1  Report  of  Commission  appointed  to  investigate  the  waste 
of  coal  mining,  witli  a  view  to  tlie  utilizing  of  the  waste.  Com- 
monwealth of  Pennsylvania,  Phila.,  1893.  —  J.  F.  Jones,  "A 
Short  Description  of  the  Pennsylvania  Anthracite  Coal  Fields," 
Philadelphia,  1892. 


THE   OBJECTS    OF    ORGANIZATION.  33 

41,000,000  tons.  Of  this  total,  the  lines  mentioned 
bring  about  35%  to  tide-water.  Of  the  total 
product  in  1892,  70%  were  consumed  in  Pennsyl- 
vania, New  York,  and  New  Jersey;  10%  in  the 
New  England  states;  13%  in  the  western  states; 
4%  in  the  southern  and  Pacific  states;  and  3% 
in  Canada. 

The  coal  lands  belong  parti}'  to  the  railroads 
themselves,  partly  to  companies  whose  stock  is 
in  their  control,  or  who  are  otherwise  dependent 
upon  them.  Only  about  5%  are  independent 
and  in  i)rivate  hands. 

In  1884  the  pool  arranged  for  monthly  meetings 
of  the  sales  agents,  at  which  they  sliould  agree 
to  a  definite  allotment  of  the  output.  This,  a 
"friendly  agreement  among  gentlemen,"  merely 
oral,  without  any  penalties  for  violation  of  the 
agreement,  is  said  not  to  have  been  obeyed  very 
strictly.  In  1891  the  Reading  obtained  control  of 
over  (10%  of  the  total  output  l)v  leasing  tlie  Cen- 
tral Railroad  of  New  Jersey,  and  the  Lehigh  Valley 
road  for  999  years  each ;  it  attempted  thereupon 
to  bring  about  a  further  centralization  and  a  more 
binding  agreement  with  the  others.  About  85% 
of  the  coal  roads  became  parties  to  this,  the 
Pennsylvania  alone  absolutely  refusing.  Py  })ur- 
chases  of  shares  in  the  New  York  and  New  England 


34  INDUSTRIAL   COMBINATIONS. 

Railroad,  the  president  of  the  Reading  system  aimed 
at  opening  a  direct  outlet  into  New  England. 
But  in  October  of  the  same  year  signs  of  decay  were 
already  ajjparent,  when  the  Delaware  road  began 
to  exceed  its  allotted  quota  of  the  output.  The 
managers  of  the  Jersey  Central,  also,  no  longer 
seemed  to  be  satisfied  with  the  arrangements ; 
they,  or  powerful  interests  behind  them,  were 
able  to  secure  a  legal  decision  from  the  courts  of 
New  Jersey, — based  upon  a  recent  statute  which 
had  been  advocated  by  the  Pennsylvania  railroad 
interest,  —  which  declared  a  lease  entered  into  by 
a  foreign  corporation  illegal  and  void.^  As  a  mat- 
ter of  fact,  the  president  and  managers  of  the  Read- 
ing, seeing  their  old  plan  failing,  had  sold  out  their 
own  interest  in  the  road  and  invested  heavily  in 
other  stocks.  They  managed  in  a  short  time  to 
make  the  Reading  pay  |5l,500,000  for  its  lease  of 
the  Lehigh  Valley ;  and  circulated  fictitious  reports, 
causing  enormous  English  investments  in  Reading. 
Then  suddenly  they  declared  the  road  bankrupt, 
which  terminated  eo  ipso  the  Lehigh  Valley  lease. 
Thus  the  coal  combine  foundered. 

The  union  of  sales  agents,  however,  continues  to 
exist.     Its  success  is  only  moderate,  as  every  par- 

1  See  Appendix  IX. 


THE   OBJECTS    OF    ORGANIZATION.  35 

ticipant  secretly  breaks  the  agreements.  Furllier- 
more,  the  Pennsylvania  system  refuses  to  become 
member  of  any  close  agreement  for  restricting  and 
allotting  the  output.  Its  assessed  share  is  10%. 
But  as  the  road  is  miner  as  well  as  carrier, 
it  can  afford  to  cut  prices  on  the  raw  product, 
being  compensated  by  ample  freight  rates.  The 
cost  of  freight  Avitliin  the  last  few  years  has  aver- 
aged between  4(3%  and  40%  of  the  price  of  coal 
in  New  York  City. 

It  is  impossible  to  foretell  liow  the  anthracite 
coal  trade  will  develop  in  the  near  future. 
Bituminous  is  gradually  replacing  anthracite  in 
the  iron  industry,  as  better  results  are  obtained 
thereby.  On  the  other  hand,  the  western  states 
bring  a  new  demand  for  anthracite.  They 
consumed  2,231,000  tons  in  1H82,  and  4,990,000 
tons  in  1889.  This  is  ju-obably  due  to  the 
movement  to  rei)lace  the  dirty  and  unhealthy 
soft  coal  by  the  more  cleanly  anthracite  in  large 
cities. 

To  this  same  group  l)elongs  a  coml)ine  in 
the  borax  production,  which  is  concentrated  in 
some  of  tlic  western  states.  Wa  hear,  in  ccitaiii 
districts  of  tlie  country,  about  combinations  in 
quarries,  particularly  in  marble  and  sandstone  ; 
e.ff.  the  latter  in  connection  with  agreements  with 


36  INDUSTRIAL   COMBINATIONS. 

the  architects  and  contractors  of  New  York.  But, 
on  the  whole,  the  failure  of  the  great  inter- 
national copper  syndicate  seems  temporarily  to 
have  checked  the  attempts  at  combination. in  the 
mining  industries. 

Much  more  numerous  are  the  attempts  at  com- 
bination in  those  industries  which  use  the  products 
of  mining  as  raw  materials.  Combines  exist  for 
the  various  products  of  the  iron,  copper,  zinc,  sil- 
ver, and  lead  industries,  and  especially  for  refined 
petroleum.  This  has  been  manufactured  for  a 
long  while  exclusively  in  the  United  States,  and 
its  only  possible  competitor,  the  oil  from  the  Baku 
districts  of  Russia,  is  of  comparatively  recent  ori- 
gin. The  failure  of  attempts  to  monopolize  the 
production  of  the  raw  material,  is  explained  by 
the  fact  that  the  digging  of  a  well  requires  only 
a  small  capital ;  so  that  men  of  small  capital  are 
able  every  day  to  open  new  wells,  the  run  of 
which  will,  of -course,  not  exceed  from  twelve  to 
twenty  years.  Refining  and  transportation,  on 
the  other  hand,  require  such  an  enormous  capital 
to  be  profitable,  that  only  the  most  centralized 
undertaking  will  succeed  in  them.  The  same 
is   true    about    cotton   oil. 

II.  Quasi  -  natural  monopolies;  i.e.  certain 
plants     which     everybody     can     establish,     but 


THE  OBJECTS   OF   ORGANIZATION.  37 

which,  once  introduced,  can  hardly  be  competed 
with,  at  least  only  with  very  disastrous  economic 
consequences;  because  they  require  an  enormous 
machinery  of  capital,  employees,  and  manage- 
ment. By  the  mere  fact  of  their  existence,  they 
become  nearly  as  powerful  as  natural  monopolies. 
Therefore  it  is  now  almost  generall}-  recognized 
that  they  cannot  be  treated  like  other  business 
undertakings. 

(a)  The  general  knowledge  of  raihvay  affairs 
in  this  country  makes  it  unnecessary  to  dwell 
upon  them  at  any  length.  It  need  only  be  ob- 
served that  a  tendency  towards  centralization  has 
existed  from  the  first  in  the  railroad  world,  and 
that  this  centralizing  process  has  steadily  contin- 
ued in  spite  of  hostile  legislation.  Competition 
among  rival  railway  systems  has  always  [)roved 
very  dangerous,  not  only  to  the  railways,  but  also 
to  the  })ublic.  The  inevitable  rate  wars  not  only 
destroy  millions  of  railway  propei'ty,  l)iit  also  very 
often  give  an  unlu'allhy  st iiiiiiliis  to  business  ac- 
tivity and  the  distiibution  of  merchandise  Ihrougli- 
out  the  country.  Tlie  crisis  of  1884  was  the  last 
great  illustration  of  this ;  the  rate  Avar  between 
the  Vanderbilt  lines  and  the  new  Drexel  Mor- 
gan system  from  New  York  to  Chicago  involved 
the   whole    country    in    its    consequences.      The 


43.'JG38 


38  INDUSTRIAL   COMBINATIONS. 

desperate  situation  of  railway  affairs  during  1893 
was  also,  to  a  large  extent,  due  to  former  contests 
of  this  kind ;  as  is*  shown  by  the  situation  of  the 
Atchison  and  the  Missouri  Pacific  systems,  which 
are  both  weakened  by  their  mutual  competition. 

The  repeal  of  the  anti-pooling  clause  of  the 
Interstate  Commerce  Law  ^  is  universally  acknowl- 
edged as  a  necessit3^  Its  repeal  will  publicly 
recognize  the  fact  that  in  the  railway  business 
unrestricted  and  free  competition  has  proved 
unwholesome. 

The  progress  towards  consolidation  among  the 
great  Atlantic  freight  and  passenger  steamship 
lines  may  be  mentioned  at  this  point,  though  the 
conditions  are  somewhat  different.  Though  these 
lines  can  hardly  be  called  quasi-natural  monopolies, 
they  have  a  great  power  based  on  their  capital, 
acquired  reputation,  and  good  will.  The  Ameri- 
can line  is  an  amnlgamation  of  three  formerly  in- 
dependent companies.  For  some  years  the  foreign 
lines  have  pooled  their  steerage  rates,  forming  for 
this  purpose  the  North  Atlantic  Steamship  Asso- 
ciation. Recently  pooling  has  been  extended  to 
other  rates.     The  North  German  Lloyd  and  the 

1  On  the  progress  of  the  consolidation  process,  see  the  Re- 
ports of  the  Interstate  Commerce  Commission,  and  its  "  Statistics 
of  Railways  in  the  United  States." 


THE  OBJECTS   OF   ORGANIZATION.  39 

Hamburg-American  line,  in  the  winter  of  1893, 
amalgamated  tlieir  entire  Mediterranean  service, 
and  soon  extended  their  agreement  to  the  whole 
passenger  traffic  on  all  their  North  American  lines, 
and  to  a  part  of  the  freight  business.  They  came 
to  terms  also  about  the  pooling  of  freight  traffic 
with  the  other  foreign  lines.  The  English,  refusing 
to  join  them,  were  notified  of  the  invasion  of  their 
own  territory  by  the  establishment  of  a  competing 
line  from  Liverpool,  thus  precipitating  a  fierce 
rate  war.  This,  it  is  reported,  very  soon  led  to 
the  reopening  of  negotiations,  which  are  still 
pending. 

(6)  1.  It  is  well  known  that  European  railroads 
are,  to  a  large  extent,  operated  by  the  state. 
More  generally  still,  state  ownership  has  been 
introduced  in  Europe  in  the  postal^  telegraphic^ 
and  telepho7ie  service,  and  the  cities  furnish  icater 
and  light.  Of  all  these  enterprises,  only  that 
branch  of  tlie  postal  service  which  takes  charge  of 
letters  and  printed  matters  is  completely  under 
pu])lic  administration  in  this  country.  The  ex- 
press service  and  the  greater  part  of  the  money  or- 
der and  transfer  business  are  conducted  to-day  by 
four  great  private  companies,^  with  an  aggregate 

1  Adams,  American,  United  States,  and  Wells-Fargo  Express 
Companies. 


40  INDUSTRIAL  COMBINATIONS. 

capital  of  148,000,000.  These  companies  have 
gradually  bought  out  or  ruined  all  smaller  ones, 
excepting  local "  expresses, "which serve  as  feeders. 
Agreements  have  been  reached  concerning  uni- 
form rates,  a  geographical  division  of  the  country 
to  avoid  competition,  and  transfers  of  business 
from  one  company  to  another.  Contracts  have 
been  concluded  with  the  railroads  for  the  mo- 
nopoly of  the  package-carrying  traffic  on  their 
respective  lines.  The  express  employees  count 
by  the  thousands. 

2.  The  telegraph  system  has  developed  since 
the  fifties.  Two  companies,  in  spite  of  numer- 
ous attempts  to  restrict  them,  and  to  declare  their 
actions  illegal,  have  succeeded  in  buying  out,  or 
checking  all  competitors,  —  tlie  older  and  more 
powerful  Western  Union,  and  the  younger  Postal 
Telegraph  Company.  They  own  some  of  the  in- 
ternational cables,  and  have  contracts  with  the 
proprietors  of  others.  They  are  controlled  and 
administered  principally  by  those  New  York  finan- 
cial circles  which  represent  the  large  railway  inter- 
ests. The  origin  of  the  Western  Union  Company 
dates  back  to  the  years  1852  to  1856,  when  this 
company  absorbed  some  fifty  minor  companies,  and 
received  a  New  York  state  charter  on  April  4,  1856. 
Many  others  were  absorbed  subsequently,  till  in 


THE   OBJECTS    OF   ORGANIZATION.  41 

1880  the  last  great  consolidation  took  place.  The 
capital  stock  of  forty-one  millions  Avas  raised  to 
eighty  millions,  "giving  par  (81'"), 000, 000)  for  the 
stocks  and  bonds  of  the  American  Union,  00% 
for  old  Atlantic  and  Pacific  stock  in  new  Western 
Union,  and  a  stock  dividend  of  48.5%  to  Western 
Union  shareholders."  ^  The  Western  Union  had 
since  1877,  through  its  ownei'ship  of  71,000  shares, 
controlled  the  Atlantic  and  Pacific  Company,  and 
had  also  gradually  bought  up  the  American  Union 
stock.  An  attempt  to  get  an  injunction  against 
this  consolidation  was  fruitless.'-^  \n  1887  the 
Baltimore  and  Ohio  Telegraph  Com})any's  stock 
was  bought  for  $5,000,000;  and  in  October,  1892, 
the  Western  Union  capital  stock  was  raised  to 
$100,000,000,  of  which  $8,620,148  were  paid  as 
a  10%  scrip  dividend  to  the  stockholders,  "sur- 
plus earnings  expended  on  the  property. "^     The 

1  Investors'  Supplement  of  the  Commercial  and  Financial 
Chronicle,  May  2(5,  1804,  p.  151. 

2  Archives  of  BradatreeVs. 

^  The  policy  of  the  Western  Union  a(lniinistratu)u  was, 
except  on  certain  occasions  when  Jay  Gould  abused  his  influ- 
ence for  his  own  purposes,  always  very  conservative.  In  former 
times  of  hard  ficchtins  with  rival.s,  the  payment  of  dividends  was 
stopped,  in  order  not  to  impair  the  capital.  It  is  worth  while 
noticiiisi  that  the  Financial  and  Commercial  Chronicle,  No. 
14!)8,  re]iorts  tliat  after  Jay  (Jould's  death  the  seeurities  rose 
in  price  as  well  as  in  public  appreciation. 


42 


INDUSTRIAL  COMBINATIONS. 


following  table  shows  the  property  and  business 
of  the  company :  ^  — 


Year. 

Miles  of 
Poles  & 
Cables. 

Miles  of 
Wire. 

Number 

of 
Offices. 

Number  of 

Messages. 

Keceipts. 

Profits. 

1866-67 

46,270 

85,219 

2,505 

5,879,282 

$6,586,925 

$2,024,919 

1869-70 

54,109 

112,191 

3,972 

9,157,646 

7,138,737 

2,227,905 

1879-80 

85,645 

233,534 

9,077 

29,215,509 

12,782,894 

5,833,937 

1890-91 

187,981 

715,591 

20,098 

59,148,343 

23,034,320 

6,005,587 

1892-93 

189,936 

769,201 

21,078 

06,591,858 

24,978,443 

7,496,037 

The  dividends  in  1887  amounted  to  2% ;  since 
then  they  were  5%  per  annum.  In  January,  1890, 
an  extra  dividend  of  7|%  was  declared,  and  in 
1892  the  10%  stock  dividend  referred  to. 

The  Postal  Telegrajjli  Cable  Company  is  the 
successor  of  the  Postal  Telegraph  Company  and 
the  Postal  Telegraph  and  Cable  Compaii}'.  Its 
capital  is  to-day  $10,000,000. 

The  Western  Union  Telegraph  offices  line  the 
railroads ;  the  Postal  uses  the  public  highways. 
The  growth  of  the  demand  for  the  telegraph  ser- 
vice has  been  so  rapid,  specially  between  the  large 
centres  of  population,  that  it  was  almost  impossi- 
ble for  one  system  to  keep  pace  with  it.      This 


1  Investors''  Eeview,  ibid.,  p.  152. 


THE   OBJECTS    OF   ORGANIZATION.  43 

explains  why  there  are  still  to-clay  two  separate 
organizations,  which,  however,  will  by  and  by 
probably  amalgamate. 

The  rates  for  telegraphing  have  meanwhile 
steadily  and  largely  decreased,  and  are  to-day  for 
shorter  distances  not  appreciably  higher,  and,  con- 
sidering the  purchasing  power  of  money  in  the 
United  States,  perhaps  lower,  than  in  Europe.^ 

The  telephone  service  is  monopolized  by  the 
Bell  Telephone  Company  and  its  concessionaires, 
after  a  victory  in  a  number  of  patent  cases.  Of 
tlie  total  amount  of  $82,000,000  invested  in  tele- 
phone stocks,  this  company  owns  a  majority. 
The  local  service  is  done  by  a  number  of  indi- 
vidual companies,  some  of  which  are  confined  to 
certain  parts  of  a  state,  as  in  New  York  ;  others 
extend  over  the  whole  state,  as  in  Nebraska; 
others  over  several  slates,  as  does  the  New  Eng- 
land Bell  Tele[)]ionc  Comjjany.  The  interstate 
service  is  done  by  the  American  Tt'k'graph  and 
TclcjilioiH'  ('()ni])any.  Willi  the  Western  Union 
Teh'graph,  the  General  Electric  Company,  and 
other  large  concerns,  the  Bell  Comi)any  has 
made    especial   contracts.      The    individual    eom- 

1  li.  T.  Ely,  "'Ihc  Telegraph  Monnpoly,"  14'.»,  Xnrth  Amrr- 
ica)i  licvicw,  188'.l;  (r.  dunlon,  "The  Kcoiunnio  ami  Sucial 
Aspect  of  Trusts,"  3,  Political  Science  Quarterly,  18bd. 


44  INDUSTRIAL  COMBINATIONS. 

panics  enjoy  rebates  up  to  50%  and  more,  and  the 
monopoly  for  their  districts.  The  charges  are 
rather  high.  After  some  of  the  patents  had  ex- 
pired, on  January  28,  1894,  a  slight  reduction  was 
expected,  to  prevent  possible  competition. ^ 

3.  The  water  supply  of  many  of  the  large  cities 
and  districts  is  also  owned  by  capitalistic  com- 
panies which  have  acquired  chartered  privileges. 
In  many  places  a  lease  is  granted  to  them  by  the 
communities,  either  for  fixed  money  rental  or  for 
a  share  in  the  receipts.  A  particular  source  of 
complaint  has  arisen  on  account  of  the  use 
of  disreputable  means  in  obtaining  the  charter. 
The  charge  of  bribing  influential  persons,  with 
the  intention  of  putting  competing  interests  at  a 
disadvantage,  has  often  been  brought.  Valuable 
franchises  are  thus  said  to  be  unjustly  dis})osed 
of ;  for  the  community  does  not  at  present  receive 
an  adequate  share  in  the  profits.  The  tendency 
is  in  favour  of  the  public  administration  of  these 
institutions. 

4.  The  same  is  true  of  gas  works.  Of  particulai- 
interest  for  our  purposes  is  the  so-called  Chicago 
Gas  Trust.  The  four  gas  companies  of  Chicago 
liad   formed  a   regular  trust   in  April,  1887,  the 

1  See  Group  4. 


THE   OBJECTS   OF   ORGANIZATION.  45 

"Chicago  Gas  Trust  Company."  In  April,  1890, 
the  name  was  changed  to  the  "  Chicago  Gas  Com- 
pany," and  an  Illinois  charter  taken  out.  As 
a  concession  to  the  public  feeling,  the  state  of 
Illinois  soon  proceeded  against  the  company, 
and  in  the  subsequent  contest  the  organization 
was  declared  illegal.  Thereupon  the  stock- 
holders surrendered  their  charter,  ^  and  a  com- 
mittee was  appointed  to  wind  up  its  aiTairs. 
But  immediately  after  consultation  with  the 
attorney-general  of  Illinois,  in  April,  1891,  the 
stock  of  all  the  four  companies  was  deposited 
with  the  Fidelity  Insurance  Trust  and  Safe 
Deposit  Company  of  Philadelphia.  This  company 
issued  trust  receipts,  certifying  "  that  the  holder 
is  entitled  to  his  ratable  proportion  of  the  owner- 
ship in  all  the  stocks  of  the  several  Chicago  gas 
companies,  held  by  the  Fidelity  Company  (subject 
to  the  lien  of  the  bonds),  and  has  a  right  to  receive 
the  dividends  thereon,  and  to  vote  the  same  as  he 
may  choose." ^  Of  the  twenty-five  millions  of 
trust  receipts,  $114,200  have  been  cancelled.     In 

1  Bradstreef  s  Archives,  Investors'  Supplement  of  the  Com- 
mercial and  Financial  Chronicle,  March,  1804,  p.  138  ;  May, 
1894,  p.  140. 

2  The  bonds  formerly  issued  by  the  Trust  are  still  under  the 
guarantee  of  the  four  companies  jointly.  See  Comnurcial  and 
Financial  Chronicle,  vol.  xlvii.,  p.  740. 


46  INDUSTRIAL   COMBINATIONS. 

September,  1893,  ten  millions  of  6%  bonds  were 
issued,  of  which  four  millions  wei'e  used  to  re- 
deem all  prior  bonds.  The  companies  furthermore 
control  the  Chicago  Economic  Fuel  Gas  Company. 
Recently  the  attorney-general  of  Illinois  has  begun 
new  proceedings  to  annul  the  charters  of  the  par- 
ticipant companies,  on  the  ground  that  they  are 
still  maintaining  a  "trust."  ^ 

To  this  group  belongs  also,  from  one  point  of 
view,  the  General  Electric  Company.  It  has  an 
authorized  capital  of  $50,000,000,  of  which 
110,000,000  may  be  preferred  cumulative  seven 
per  cents  ;  130,459,700  common  and  -$4,251,900 
preferred  stock  are  outstanding.  Convertible 
debentures  are  due  to  the  amount  of  $10,000,000, 
as  well  as  a  small  amount  of  guaranteed  bonds 
of  the  old  Thomson-Houston  securities.  The 
General  Electric  Company  has  been  organized 
under  a  New  York  charter.  It  consists  of  the 
Edison  General  Electric,  the  Edison  Electric 
Light,  the  Thomson-Houston  Electric,  and  the 
Thomson-Houston  International  Companies.     On 

1  It  seems  very  remarkable  to  a  foreigner  that  a  mimber  of 
papers  of  good  standing  have  stated,  without  being  contradicted, 
that  the  details  of  the  attorney-generars  proceedings  were  known 
earlier  by  certain  stockbrokers  than  by  the  general  public,  and 
have  added,  that  these  proceedings  were  apparently  utilized  for 
the  purpose  of  stock  manipulation. 


THE   OBJECTS    OF   ORGANIZATION.  47 

January  31,  1894,  1479  central-station  lighting 
companies  and  541  electric  railways  used  its 
apparatus.^  Formerly  the  General  Electric  ac- 
cepted payments  from  these  companies  in  their 
own  securities.  In  August,  1893,  because  of  the 
financial  stringency,  the  (leneral  Electric  Company 
was  obliged  to  turn  over  twelve  millions  of  these 
miscellaneous  securities  to  a  new  institution  : 
"Street  Railway  and  Illuminating  Properties," 
organized  to  receive  them  for  four  millions  in 
cash.  Since  then,  only  cash  sales  can  be  made. 
Owning  all  the  patents  of  its  mother  companies, 
the  General  Electric  belongs,  like  the  Bell  Tele- 
phone Company,  also  to  the  next  group : 

III.  Legal  monopolies  to-day  are  Patents  and 
Copyrights.  There  has  never  been  an}-  question 
about  their  right  to  existence,  "  as  they  stimulate 
the  genius  and  give  a  due  reward  to  the  promoters 
of  human  progress."^  Patent  rights  have  been 
the  basis  of  innumerable  important  combinations, 
originating  in  patented  processes  of  manufactur- 
ing, oi"  in  patented  machinery.  The  legal  decisions 
are,  contrary  to  the  tendency  in  other  instances, 
usually  in  favour  of  the  widest  construction  of 
tlie  franchises  given  by  patent. 

1  Investors'  Supplement,  May,  1894,  pp.  \\?,,  144. 

2  Vide  /•Spelling,  "  Trusts  and  Monopolies." 


48  INDUSTRIAL   COMBINATIONS. 

In  the  case  of  important  patents,  we  find  either 
several  branch  manufactures  distributed  all  over 
the  country  for  utilizing  the  process,  or  one  cen- 
tral establishment.  Sometimes  the  owners  grant 
concessions  to  a  number  of  other  establishments 
to  use  their  patents  in  return  for  fixed  royalties, 
whilst  they  pledge  themselves  to  a  certain  restric- 
tion in  the  number  of  their  concessionaires.  In 
some  cases,  finally,  the  undertakers  of  one  group 
combine  to  buy  up  various  patents,  and  use  them 
jointly,  or  they  establish  another  company  to  uti- 
lize them. 

All  of  these  different  instances  are  strikingly 
exemplified  in  the  barbed-wire  industry. ^  The 
house  of  Washburn  &  Moen  had  originally  ac- 
quired the  patents  relative  to  the  manufacturing 
of  barbed  wire.  Its  exclusive  right  has  been 
vainly  contested  in  several  law-suits  since  1873. 
In  the  first  stage,  Washburn  &  Moen  produced  al- 
most the  entire  supply.  When  the  industry  began 
to  grow,  the  firm  established  branches.  Then  it 
admitted  several  other  companies  upon  payment 
of  high  fees.  Finally,  those  jointly  bought  up 
the  entire  set  of  patents,  and  transferred  it  to  the 
" Columbia  Patent  Company,"  chartered  in  Ken- 
tucky, with  a  capital  of  four  millions.  Since  then 
1  Collection  of  Mr.  H.  D.  Lloyd. 


THE   OBJECTS    OF   ORGANIZATION.  49 

outsiders  are  only  admitted  upon  the  payment  of 
exorbitant  fees.^ 

Among  the  combinations  on  the  basis  of  copy- 
riglit,  tlie  so-called  school-book  trust  is  Avortli 
mentioning.  It  embraces  all  publishers  of  school- 
books,  except  three  publishing  liouses,  and  it. has 
been  attacked  for  keeping  prices  undul}^  high.'^ 

IV.  Besides  the  groups  mentioned  heretofore, 
we  find  a  vast  number  of  combinations,  the  cause 
for  which  can  only  to  a  limited  extent  be  found 
in  the  conditions  described.  In  numerous  indus- 
tries, they  spasmodically  appear,  and  often  disap- 
pear just  as  quickly.  The  free-traders  attribute 
their  growth  to  the  protective  tariff,  upon  which, 
they  assert,  the  welfare  of  tlie  combinations  de- 
pends entirely.  Others  claim  that  they  could 
not  have  come  into  existence  without  a  ci-iminal 
conspiracy  with  the  railroads  of  the  country. 

Day  by  day  one  reads  of  the  birth,  growtli,  and 
vanishing  of  '•'pools"  and  combinations,  of  aiiial- 
gamaiions  and  separations. 

1  An  agreement  to  exclude  outsiders  absolutely  from  the 
enjoyment  of  patents  of  that  sort,  or  to  combine  for  that  pur- 
pose, had  been  declared  illegal.  Hut  it  is  permitted  to  pay 
money  to  a  person  who  desists  from  ;iny  claim  to  the  use  of 
certain  patents  ;  see  SpeUiiK/. 

^  DeWitt  Warner,  "Tariff  Trusts,"  5  Tariff  Kefurm,  p. 
729. 


60  INDUSTRIAL   COMBINATIONS. 

The  free  trade  organ  of  the  New  York  Reform 
Oluh  1  mentions  one  hundred  instances  which  it 
aftirms  are  entirely  due  to  protection,  and  the  con- 
nection of  which  with  the  high  protective  duties 
it  strives  to  show :  anthracite  coal ;  axe  ;  barbed 
wire  ;  biscuit  and  cracker  ;  bolt  and  nut ;  boiler 
boot  and  shoe ;    borax ;    broom ;  brush ;  button 
carbon  ;    candle  ;    cartridge  ;    casket ;    castor  oil 
celluloid;  cigarette;  condensed  milk;  copper  ingot 
copper  sheet ;   cordage  ;   crockery ;    cotton  duck 
cottonseed  oil ;    cotton   thread ;    electric  supply 
envelope ;    flint  glass  ;   fork  and  hoe  ;   fruit   jar 
galvanized    iron  ;     glove  ;     harrow  ;     harvester 
hinge ;    indurated    fibre ;    lead ;     leather   board 
lime  ;   linseed  oil ;    lithograph  ;    locomotive  tire 
marble ;    match  ;   morocco  leather  ;   oat  meal ;  oil 
cloth ;    paper   bag ;    pitch ;    plate    glass ;    pocket 
cutlery  ;  powder  ;  preserves ;  pulp  ;  rice  ;  rubber, 
gossamer  ;  rubber,  general ;  safe  ;  salt ;  sandstone  ; 
sanitary  ware  ;  sand  paper ;  sash,  door  and  blind  ; 
saw ;  school-book  ;  school  furniture  ;  sewer  #ipe  ; 
shot  and  lead ;  skewer ;  smelters  ;  soap  ;  soda-water 
machinery ;   spool,  bobbin  and  shuttle  ;   sponge  ; 
starch ;     steel    rail ;    stove   board ;    straw    board ; 
structural   steel ;    sugar  ;    teazel ;    tinned    plate ; 

1  See  Warner  in  "  Tariff  Trusts." 


THE   OBJECTS    OF   ORGANIZATION.  51 

tombstone;  trunk;  tube;  type;  nmbrella;  vapour- 
stove  ;  wall  paper ;  watch  ;  wheel ;  whip  ;  window 
glass ;  wire ;  wood  screw ;  wool  hat ;  wrapping 
paper ;   and  yellow  pine. 

This  list  is  no  hniger  accurate.  In  the  two 
years  since  it  was  compiled,  a  number  of  the  com- 
binations have  dissolved  (as  the  trunk  trust). 
Others  are  established,  as  the  "American  Leatlier 
Company,"  the  wall-paper,  the  und)rolla,  the  lire- 
extinguisher,  and  the  playing-cards  trusts.  But 
the  list  neither  claims  completeness,  nor  would  it 
be  possible  to  prove  in  all  instances  that  the  close- 
ness of  the  union  is  such  as  to  warrant  the  name  of 
"  pool."  A  valuable  list  has  recently  been  given 
in  INIr.  Lloyd's  book  ;  this  has  served  as  the  basis 
of  the  list  of  combinations  given  in  tlic  iVppendix.i 

]\Iuch  can  be  said  in  detail  concerning  the 
alleged  relation  between  the  combinations  and  the 
tariff;  e.<j.  an  extension  of  the  great  cordage  com- 
bination all  over  the  country  was  i)i'('pai'ed  in  IS'.H). 
in  anticipation  of  the  passage  of  the  McKinley 
Act.2 

A  market  nationally  closed  is  a  more  fertile 
soil  for  the  rise  of  coiiihinat  ions,  hccausc  it  olTcrs 
a  firmer  gras[),  and   consecincntly  a  better  cliaiut' 

1  Appendix  XV.  -  BradslrccCs  Archives. 


52  INDUSTRIAL   COMBINATIONS. 

of  success.  The  prospect  of  a  full  enjoyment  of 
the  extra  profits  derived  from  the  protective  sys- 
tem is  very  inviting ;  therefore  a  change  of  the 
tariff  system  would  probably  have  a  certain  bear- 
ing u})on  a  number  of  combinations.  As  to  the 
other  alleged  cause  we  have  already  remarked 
that  without  doubt  a  number  of  combinations 
have  been  able  to  secure  special  advantages  from 
the  railroads,  1  and  that  these  have  greatly  facili- 
tated their  growth.  But  closer  investigation  shows 
that  these  are  only  two  of  the  many  points  to  be 
considered,  and,  as  will  be  seen,  not  even  the  most 
prominent  ones.  A  general  economic  tendency  of 
a  far  more  profound  nature  has  called  into  exist- 
ence these  organizations.  They  may  rightly  be 
called  capitalistic  combinations. 

1  Vide  Bonham,  "  Railroad  Secrecy  and  Trusts." 


NATURE   AND   EFFECT   OF   TRUSTS.  53 


CHAPTER   V. 

NATURE   AND   EFFECT   OF   TRUSTS. 

We  liave  in  the  foreo^oing  two  cliajiters  drawn 
the  general  lines  of  classification  for  all  the  vari- 
ous groups.  The  rise  of  combinations  we  found 
to  have  been  favoured  by  natural  or  artificial 
monopolies,  though  here  was  not  the  single  cause 
of  their  appearance,  and  we  found  that  the  form 
depended  upon  the  inclination  of  the  })arties,  and 
their  confidence  in  the  ability  of  the  leaders.  But 
what  makes  them  flourish?      How  do  they  work? 

We  shall  now  discuss  somewhat  more  at  length 
the  highest  forms  of  undertakings,  —  the  trust 
and  the  corporation  of  corporations.  Here  ca])- 
ital  and  business  al)ility  work  in  niiisoii  towards 
tlie  regulation  of  all  the  elements  wliicli  c(tn- 
tribute  to  the  production  of  tlie  artich's  in 
(piestion.  We  shall  consider  principally  tlic 
largest  of  them,  sucli  as  the  petroleum,  lead, 
cotton  oil,  linseed  oil,  sugar,  cigarettes,  matclics. 
whiskey,  starch,  cordage,  crackers,  rubbci-.  and 
leather  combines. 


64  INDUSTRIAL   COMBINATIONS. 

The  goal  of  undertakings  of  tliis  sort  is  rightly 
expressed  by  such  phrases  as  the  cheapening  of 
production,  the  regulation  of  output,  and  the 
control  of  prices. 

I.  The  large  undertakings  do  not  originate  in 
ideal,  moral,  or  general  economic  considerations  ; 
their  immediate  aims  are  simply  larger  and  surer 
profits.  Hardly  would  a  Rockefeller  in  his  first 
efforts  have  divined  what  economic  mission  his 
action  was  destined  to  fulfil;  liardly  did  old 
Commodore  Vanderbilt  invest  his  first  money, 
acquired  through  the  Staten  Island  ferry  service, 
in  railroads,  with  the  intention  of  establishing 
a  model  of  centralized  railroad  administration. 
But  none  the  less  the  existence  of  these  great 
personalities  has  been  of  an  extraordinary,  and 
often  decisive,  importance  for  the  general  develop- 
ment of  the  several  industries. 

That  such  men  went  into  the  petroleum  trade, 
or  into  New  York  railroad  enterprises,  had,  as 
things  turned  out,  consequences  not  only  much 
beyond  their  anticipation,  but  also  affecting  re- 
gions far  outside  their  immediate  sphere.  In  this 
country  where  the  activity  of  the  individual  is 
least  restricted,  the  personality  of  the  projector, 
more  perhaps  than  in  Europe,  seems  to  dominate 
the  situation.     Men  who  promote  the  giant  works 


NATURE    AND   EFFECT   OF   TRUSTS.  55 

of  civilization  and  who,  with  creative  energy,  have 
impressed  the  stamp  of  their  individuality  upon 
whole  industries,  can  be  found  more  often  here 
than   abroad.  1     These  men  have  to  show  initia- 

1  The  rapidity  with  which  one  industrial  phase  has  succeeded 
another  has  brought  about  tlie  impression  that  a  hirger  percen- 
tage of  extraordinarily  able  men  is  to  be  found  in  the  United 
States  than  elsewhere.  This  does  not  seem  to  me  to  be  justi- 
fied. American  authors  (^Gunton,  Cook,  Bonham,  etc.)  show, 
however,  what  has  led  to  this  belief.  In  Europe  the  leading 
spirits  are  often  attracted  into  other  directions, — to  the  gov- 
ernment, the  army,  or  the  paths  of  abstract  science ;  in  the 
United  States  the  excei)tionally  able  man,  to  show  his  abilities, 
and  to  attain  a  coveted  position,  is  almost  entirely  restricted 
to  the  industrial  field.  With  the  public  at  large  the  govern- 
mental service  is  only  a  bu.sincss,  and  a  much  less  respected 
one  than  private  business  ;  and  abstract  science  is  but  too  often 
looked  upon  with  a  feeling  of  contempt,  as  being  a  loophole  for 
second-class  geniuses.  In  such  a  democratic  comnmnity  there 
does  not  exist  any  hereditary  aristocracy,  and  the  public  service 
lias  not  yet  created  an  aristocracy  of  honour.  Therefore  ambi- 
tion finds  the  only  way  to  entrance  into  and  pre-eminence  in 
society  "through  the  golden  door  of  the  dollar."  Not  so  much 
the  love  of  the  almighty  dollar  per  se,  as  the  social  pre-eminence 
and  power  secured  tlirough  its  agency,  seems  to  be  the  leading 
motive  for  the  most  successful  business  men  and  their  lawycre 
in  their  enterprises.  In  his  inquiries  the  author  fountl  that,  in 
the  case  of  two  large  trusts,  their  establishment  was  exjtlained 
by  the  social  aspiration  of  their  promoters.  They  had  already 
become  very  rich,  and  economically  there  was  no  strong  induce- 
ment for  them.  Their  chief  motive  to  accept  the  proposition  to 
join  a  certain  combination  in  a  leading  position  was  a  .social  one. 
Tiiey  expected  that  this  would  lead  tiiem  to  that  higher  place 
on  the  social  ladder,  which  heretofore  they  had  vainly  striven 


56  INDUSTRIAL   COMBINATIONS. 

tive,  to  realize  the  wants  of  the  times,  and  to  take 
the  leadership  of  the  various  movements.  And 
by  grouping  the  existing  means  for  these  purposes 
in  an  appropriate  manner,  they  become  examples 
to  others. 

Governmental  and  police  institutions,  the  pub- 
lic ideas  of  honour  and  business  morality,  are 
somewhat  more  flexible  here,  and  therefore  men 
find  greater  opportunities  than  their  European 
brethren.  Different  periods  and  stages  of  society 
have  different  needs.  There  are  times  of  rapid 
progress,  in  which  the  personality  of  the  promoter, 
the  audacious  creator,  holds  the  predominant  posi- 
tion :  and  there  are  times  for  the  conservative 
preservation  of  existing  conditions,  times  which 
rely  upon  organization  and  regidation,  and  \\  hieli 
distribute  over  the  country  the  progress  alread}' 
attained.  Invention  and  creation  depend  upon 
one  great  spirit ;  the  carrying-on  of  the  work 
afterwards  may  be  provided  for  by  a  consulting 
body  of  average  men. 

Even  the  most  conspicuous  men  are  restricted 
by  the  iron  tendencies   of  general   development. 

for.  To  other  strong  men  the  mere  sense  of  power  is  welcome. 
"For  the  time  being  there  is  no  other  chance  for  them  in  tliis 
direction,  and,  therefore,  they  create  a  position  for  themselves 
more  powerful  than  that  of  many  a  feudal  prince."  —  Cook. 


NATURE   AND   EFFECT   OF   TRUSTS.  57 

Their  activity  is  checked.  They  cannot  arbi- 
trarily defy  what  are  so  often  called  by  the  news- 
papers and  a  certain  class  of  economists  in  this 
country  "economic  laws."  But  they  can  greatly 
advance  the  interests  of  concerns  which  have  been 
fortunate  enough  to  secure  their  services. 

II.  It  seems  that  great  economic  revolutions 
are  inevitabl}^  bound  to  crush  a  part  of  the  oppos- 
ing forces.  The  history  of  the  attempts  at  cen- 
tralization in  this  country  abounds  with  episodes, 
in  which  numberless  individuals  have  been  eco- 
nomically ruined  by  powerful  adversaries.  The 
methods  employed  were  not  always  the  most 
lionest.  We  have  already  mentioned  the  secret 
relations  between  some  of  the  trusts  and  the  rail- 
roads, and  have  shown  how  the  competitors  of  the 
trusts  found  themselves  suddeidy  annihilated  by  a 
mysterious  force.  According  to  lionliam,!  this  sys- 
tem of  secret  agreements  is  much  older  than  the 
trusts,  and  dates  from  the  very  beginning  of  rail- 
road management.  If  one  merchant  did  not  avail 
himself  of  it,  some  one  less  scrupulous  won  hi,  and 
thus  the  business  of  the  former  would  be  under- 
mined. And  these  were  not  the  only  objection- 
able  metliods   ('inj)loy('d   l)v    tin-  trusts.      N'arious 

1  Bailway  Sexn'cij  diid  Trusls,  cspocially  pp.  41-50. 


58  INDUSTRIAL   COMBINATIONS. 

most  cruel  devices,  which  coiihl  be  used  witli 
impunity  under  the  regime  of  laissez-faire,  have 
been  revealed  by  recent  investigations.  The  sighs 
of  the  victims  are  still  audible,  though  it  appears 
that  in  the  course  of  time,  with  wider  expansion, 
the  older  trusts  and  their  practices  steadily  be- 
come less  violent  and  more  conservative.  Great 
business  men  and  large  undertakings  are  even  to- 
day able  to  secure  discriminations  froui  tlie  rail- 
road companies,  and  they  slaughter  undesirable 
competitors  in  cold  blood.  But  these  are  phenom- 
ena not  peculiar  to  the  trusts.  They  occur  in  the 
establishment  of  every  large  enterprise  —  as  in 
the  building  up  of  large  dry  goods  firms  or  grocery 
houses,  trades  where  there  is  no  organization  ;  and 
the  cruelties  are  matters  not  so  much  connected 
with  our  immediate  problem  as  with  tiie  general 
public  morality.  Of  course  public  morality  is 
influenced  by  the  example  of  the  combinations 
and  their  leaders  who  take  such  a  conspicuous 
position  in  public  life. 

After  the  Standard  Oil  Company  had  broken 
the  ice,  its  imitators  found  their  task  much  easier, 
and  did  not  need  to  apply  so  much  pressure. 
Bonham's  distinction  between  trusts  wliich  origi- 
nate in  railroad  discriminations,  and  such  as  do 
not  so  originate,  useful  as  it  may  be  in  some  ways, 


NATURE    AND    EFFECT    OF    TRUSTS.  59 

is  very  superficial,  in  so  far  as  it  presupposes  lliat 
all  trusts  of  the  latter  kind  are  merely  accidental 
schemes.  Many  of  them  are  natural  outcomes 
of  long  struggles  and  alliances. 

The  whiskey  industry,  for  instance,  was  de- 
jiressed  for  many  years.  Whenever  a  change  in 
taxation  was  proposed,  the  production  of  wliiskey 
was  increased  enormously  ^  during  the  time  tlie 
debates  were  pending.^  Toward  the  end  of 
the  sixties,  the  productive  capacity  of  the  dis- 
tilleries surpassed  by  three  times  the  consum})tive 
power  of  the  country.  These  distilleries  could 
only  exist  by  means  of  enormous  revenue  frauds. 
Alcohol  was  occasionally  offered  in  the  market  at 
a  lower  price  than  the  tax  itself.  In  1870  all  l)ut 
three  distilleries  north  of  tlie  Ohio  River  pledged 
tliemselves  to  restrict  their  production  to  tA\'o- 
fifths  of  their  capacity.  Jiy  and  by  consumption 
increased,  and  in  1878  began  a  biisk  export  to 
Europe,  Avliere  bad  crops  within  the  next  few 
years  made  possible;  an  importation  of  more  tlmii 
40,000,000  gallons  of  alcohol.  Hut  tliese  pros- 
perous times  again  brought  into  the  field  nnmcr- 

1  F.  W.  Jeiik-K,  "  Whiskey  Trast,"  loc.  cit. 

2  Taxes  on  aleoliol  per  i^alloii  :  180-2,  SOc.  ;  18(54,  March,  (iOr., 
July,  .«!l.r.O;  1805,  §2.00;  1808,50c.;  1872,70c.;  1875,  00c.  ; 
1804,  $1.10. 


60  INDUSTRIAL   COMBINATIONS. 

ous  new  competitors.  When  in  1883  the  ex- 
ports began  to  decrease  in  consequence  of  good 
European  crops  and  of  changes  in  the  tariffs 
of  most  of  the  countries,  the  vast  overproduc- 
tion reappeared.  The  exports  decreased  from 
20,600,000  gallons  in  1879  to  250,000  gallons  in 
1888,  Avhilst  a  capacity  surpassing  four  times  the 
domestic  consumption  had  to  be  faced.  In  1881 
prices  had  already  fallen  below  the  cost  of  produc- 
tion, as  they  had  done  several  times  before.  The 
formation  of  a  pool  was  decided  upon  and  the  es- 
tablishment of  a  "Western  Export  Association," 
which  should  export  alcohol  even  at  a  loss,  and 
cover  the  loss  by  means  of  monthly  assessments  in 
proportion  to  the  production  of  the  different  dis- 
tilleries. None  of  the  distilleries  could  be  closed 
at  once,  because  they  were  at  the  same  time  cattle- 
feeders,  and  could  not  have  disposed  of  their  live 
stock  without  heavy  losses.  An  attempt  made  to 
secure  a  bounty  from  Congress  proved  a  failure. 
The  pool  was  broken  down  in  the  spring  of  1882 
by  the  refusal  of  some  of  its  members  to  pay  the 
assessments.  But  it  was  re-established  in  the 
fall  of  the  same  year.  From  1883  to  1887  one 
pool  follows  the  other,  until  in  1887  the  Dis- 
tillers' and  Cattle  Feeders'  Trust  was  formed. 
It  began  by  lowering  prices  in  order  to  force  out- 


NATURE   AND   EFFECT   OF   TRUSTS.  61 

side  competitors  either  to  yield  or  to   join, — a 
method  employed  by  other  trusts. 

The  belief  of  impartial  observers  is  that  without 
the  formation  of  great  combinations  the  fate  of 
smaller  and  economically  inferior  establishments 
would  have  been  still  more  problematic.  Tlie 
growth  and  preponderance  of  the  large  competi- 
tors would  have  ruiiu'd  them  ;  whereas  now  a 
considerable  percentage  of  them  could  effect  an 
entrance  into  the  new  combinations  under  fairly 
acceptable  terms.  ^  The  natural  conditions  of  pro- 
duction, such  as  the  price  of  real  estate,  of  wages, 
and  of  grain,  and  the  rates  of  transportation,  gave 
to  the  city  of  Peoria,  111.,  such  an  advantage,  that 
most  of  the  distilleries  in  other  places  would  in 
the  course  of  time  have  been  unable  to  stand  its 
competition.  So  also  the  Ilavemeyer  and  Spreck- 
els  interest  had  already  such  a  predominant  posi- 
tion in  the  sugar-refining  industry,  they  produced 
so  much  more  cheaply  in  consequence  of  the  ex- 
tent of  their  works  and  the  improved  metliods 
secured  by  i)atents,  that  tliey  largely  controlhnl 
the  market  prices.     Mr.  Havemeyer  has  testified 

1  Vide  Mr.  Havenicyer's  testimony  before  the  United  States 
Senate  Investigation  Committee  on  Alleged  Stock  Sperulation 
of  United  States  Senators,  52d  Congress,  second  session,  Wash- 
ington, 1894. 


62  INDUSTRIAL   COMBINATIONS. 

before  a  Senate  Committee  that  many  of  the 
smaller  refineries  had  very  often  to  choose 
between  stopping  their  factories,  or  running  them 
at  a  loss,  when  he  and  a  few  others  could  still 
make  a  very  fair  profit.  In  the  steel  industry 
the  gigantic  Carnegie  works  in  Pittsburgh  pre- 
dominate to  such  a  degree  that  rival  factories 
must  make  every  effort  to  pool  with  Mr.  Car- 
negie. And,  as  frequently  as  an  old  pool  is 
broken  up,  they  enter  into  new  negotiations  in 
spite  of  the  experience  that  co-operation  with 
Mr.  Carnegie  does  not  always  turn  out  entirely 
to  their  own  advantage.  He  governs  with  almost 
absolute  power.  At  the  close  of  the  year  18*J3 
he  broke  up  a  pool,^  because  one  of  its  members 
had  produced  more  than  his  share.  Then,  a  few 
weeks  later,^  he  combined  again  Avith  six  steel 
manufacturers,  thus  bringing  65%  of  the  output 
under  his  control.  Outsiders  were  paid  heavy 
premiums  to  close  their  establishments.^ 

1  Vide  the  terms  of  the  pool  in  the  Iron  Age,  November  16, 
1893. 

2  Vide  speech  of  Congressman  Johnson  of  Ohio,  in  tlie  Con- 
gressional Record  of  January  10,  180-t. 

3  Tlie  circumvention  of  the  anti-trust  legislation  is  effected 
in  an  interesting  way.  One  of  the  participants  in  the  pool 
makes  a  contract  with  a  factory  in  Maryland  for  the  delivery 
of  300,000  tons  of  rails ;  but  this  is  mere  form.  In  fact,  the 
stress  is  laid  on  that  paragraph  by  which  the  former  binds 


NATUKE    AND    EFFECT    OF    TRUSTS.  63 

As  a  rule  a  combination  does  not  need  to  have 
complete  control  over  the  market  in  order  to  be 
effective.^  Generally  command  over  a  majority 
of  tlie  producers  or  tlie  greater  part  of  the  6ut})ut 
has  proved  sufficient. ^  Therefore  we  find  in  all 
these  cases  a  small  number  of  outsiders  left  more 
or  less  unmolested  as  long  as  they  do  not  show 
aggressive  tendencies.  They  enjoy  all  tlie  benefits 
of  the  ecmibine  Avithout  being  forced  into  it. 

III.  The  ability  of  a  large  undertaking  to 
j)r()<luce  more  economically  makes  it  superior  to 
a  smaller  one.  Such  an  undertaking  is  based 
II poll  tlie  employment  of  large  capital,  is  favoured 
by  local  or  individual  circumstances,  and  is 
]»i(iiii()ted  by  pre-eminent  men,  who  through 
enterprising  skill  are  able  to  secure  furtlier  ad- 
vantages. 

W'itli    the   exception   of   a   few  whose  rise  Avas 

gr;iilii;il    and    steady,    the    birth    of    combinations 

is   t'a\()iire(l  by  times  of  dulness   in   business.      In 

l)rosperous    periods    individuals    freciuently    feel 

safe  enough  in  their  independence  ;    in  hard  times 

they  realize  how  much  better  off  they  might  be 

liiiiisf'lf  to  i)ay  the  latter  a  jieiiulty  of  a  dollar  per  ton  in  case 
he  should  not  receive  tliu  ordered  rails  ;    thus  the   Maryland 
Company  receives  -SWO, ()()()  for  the  close  of  its  works. 
1  W.J.  A.'ihhij,  "The  Canadian  Su^ar  Combine." 
'^  Vide  also  Jeuks  iu  I'ol.  i^ci.  (^uar.  IX.  pp.  487,  488. 


64  INDUSTRIAL   COMBINATIONS. 

ill  union.  Extraordinarily  low  prices,  grave  dis- 
turbances of  the  market,  the  crushing  rivalry  of 
competitors,  or  vigorous  associations  of  working- 
men  with  repeated  demands  and  strikes,  give  an 
impulse  to  the  starting  of  combinations.  Never- 
theless these  would  have  met  with  much  greater 
difiticulties,  and  some  of  them  would  not  have 
come  into  existence  at  all,  had  they  not  been 
cheerfully  greeted  by  the  stock  exchanges.  The 
prospects  of  great  speculative  gains  have  proved 
very  enticing ;  though  frivolous  manipulation  — 
such  as  overcapitalization  —  and  unscientific  man- 
agement—  have  resulted  in  serious  losses. 

The  material,  administrative,  commercial,  and 
technical  basis,  on  which  the  promoter  establishes 
his  enterprise  can  soon  be  ascertained  from  the 
results  achieved.  Let  us  see  how  men  of 
sagacity  proceed. 

The  preliminaries  generally  take  months  and 
years;  they  are  often  interrupted  and  resumed; 
and  it  needs  more  than  common  ability  to  recon- 
cile all  the  diverging  interests.  When  this  is 
finally  done,  and  the  preliminaries  agreed  upon, 
a  document  (trust-deed,  articles  of  association,  or 
option  contract,!  etc.)  is  signed.''^   The  undertaking 

1  See  Appendices  I.  and  II. 

2  To  frame  this  the  most  skilful  work  of  corporation  counsel 


NATURK    AND    EFFECT   OF   TRUSTS.  G5 

is  now  })ractically  established,  and  to  comply  with 
the  legal  requirements  a  charter  ^  is  usually  taken 
out.  jMeanwhile  a  detailed  valuation  of  the  sev- 
eral properties  has  been  carried  through.  On  tliis 
basis  the  capital  of  tlie  new  company  is  divided 
among  the  parties  to  the  agreement.  An  elective 
meeting  takes  place  and  by-laws  are  agreed  upon.^ 
Thereupon  the  administration  passes  to  the  presi- 
dent and  board  of  directors.  One  of  their  tirst 
steps  is  to  ascertain  the  productive  capabilities  of 
tlie  individual  factories.  What  prove  to  be  the 
l)est  methods  of  production  are  adopted.  Oidy 
the  best  equipped  and  the  most  profitable  Avorks 
are  run  to  the  full  extent  of  their  capacity.  Of 
the  less  profitable,  as  many  are  raised  to  the  same 
degree  of  efficiency  as  are  needed  to  suppl}-  the 
market ;  the  remainder  are  closed.  The}-  have  ah 
initio  been  admitted  only  to  avoid  competition. 
Before  the  establishment  of  the  combinations 
hardly  any  industry  had  been  able  to  utilize  its 

is  retiuiied.  These  counsel  have,  of  course,  to  take  iuto  carfful 
consideration  every  legal  decision  bearing  on  the  situation,  in 
order  that  the  document  may  be  unassailable  in  the  courts. 
Such  work  and  its  importance  to  grant  interests  explain  the 
large  earnings  of  the  great  corporation  lawyers  in  the  linancial 
centres. 

1  See  Appendix  XII.  2  gee  Appendices  II.  and  XIII. 


Q6  INDUSTRIAL  COIVIBINATIONS. 

full  capability.  For  instance,  even  before  the  days 
of  the  Cotton  Oil  Trust  numerous  presses  and 
refineries  had  for  a  long  time  been  inactive.  The 
trust  closed  at  once  more  than  a  dozen  of  the  small 
old-fashioned  mills.  The  same  tiling  happened 
with  the  Sugar  Trust,  which  can  supply  the  whole 
market  with  the  product  of  one-fourth  of  the 
plants  it  owns.  The  Whiskey  Trust  immediately 
closed  sixty-eight  of  its  eighty  distilleries,  and 
with  tlie  remaining  twelve  was  enabled  to  furnish 
the  same  output  as  before,  and  soon  to  largely 
increase  it. 

The  enterprises  were  further  assisted  by  exten- 
sion into  closely  connected  and  neighbouring 
branches  of  trade,  by  gaining  and  utilizing  by- 
products, by  manufacturing  their  own  packing 
materials,  by  improving  the  means  of  transporta- 
tion, etc.  An  attempt  was  made,  and  often  with 
success,  to  increase  the  sales  and  to  extend  the 
markets.  For  this  purpose  the  Standard  Oil 
Trust  and  the  Cotton  Oil  Trust  established 
European    branches.^ 

1  See  Appendix  III.  The  Standard  Oil  Company  has  bought 
out  a  number  of  European  oil  merchants,  who  have  been  paid 
in  stock  of  the  newly  establ'shed  German-American,  Italian- 
American,  and  English-American  Petroleum  Companies.  The 
Standard  Oil  Company  declares  that  it  controls  them  by  the 
command  of  51%  of  the  stock,  whilst  they  affirm  that  they  hold 


NATURE   AND    EB'FECT   OF   TRUSTS.  67 

In  all  these  directions,  the  existing  trusts  seem 
to  have  been  quite  successful,  and,  therefore,  to 
be  making  an  approach  towards  the  economic  ideal 
of  producing  the  largest  amount  of  utilities  'willi 
a  steadily  decreasing  amount  of  labour  and  with 
the  greatest  possible  saving  of  materials.  We 
find  continual  efforts  at  further  advance,  by  the 
application  of  the  newest  machinery  and  of  new 
labour-saving  processes,  and  this  as  rapidly  as 
is  consistent  with  the  amortization  of  the  means 
of  production  on  hand.  For  example,  the  Amer- 
ican Sugar  Refining  Company  has  built  a  new 
refiner}^,  furnished  with  the  newest  technical 
improvements,  to  serve  only  as  a  safeguard  in 
the  case  of  a  suddenly  increased  demand,  or  of 
stoppages  in  other  factories.  Tlie  Cotton  Oil 
Company  has  a  great  experimental  station  of  its 
own.  The  Whiskey  Trust  has  introduced  quite 
a  number  of  inventions  to  improve  the  quality 
of  its  })roduct.  In  the  domain  of  the  Staiidaid 
Oil  Trust  there  exist  to-day  more  than  three  hun- 
dred by-products,  Avliicli  have  yielded  most  valu- 
able materials  to  numerous  other  industries ;  and 
the  danger  of  rxplosioii  of  tlu-  oil  has  been  con- 
tiuuall}'  diininislic(l  by  int i'o(luciiig  more  effective 

60%.     As  this  information  comes  from  ri'liable  informants  on 
both  sides,  the  author  is  unable  to  explain  the  discrepancy. 


68  INDUSTRIAL  COMBINATIONS. 

refining  processes.  ^  By  all  new  inventions  tlie 
whole  business  is  benefited  at  the  same  time,  while 
the  great  number  of  plants  gives  a  chance  to  make 
local  experiments  with  new  processes  of  manu- 
factures. 

In  this  direction,  none  of  the  adversaries  have 
been  able  successfully  to  accuse  the  trusts  of 
negligence ;  on  the  contrary,  since  the  beginning 
complaints  have  been  based  upon  the  very  alle- 
gation that  through  the  introduction  of  labour- 
saving  processes  and  of  machinery  of  the  newest 
construction,  and  through  the  closing  of  super- 
fluous factories,  numerous  workingmen  have  lost 
their  occupation,  —  an  objection  which  surely  is 
not  a  new  one,  nor  peculiar  to  this  form  of 
industrial  progress.  Only  in  combinations  secure 
against  all  kinds  of  competition — i.e.  legal  monop- 
olies— can  there  ever  arise  the  danger  of  a  stand- 
still in  methods  of  production. 

IV.  As  regards  the  regulation  of  production 
there    have    been    occasional    complaints    of    an 

1  It  has  recently  been  charged  that  the  Standard  Oil  Com- 
pany's product  has  deteriorated.  In  Europe  as  well  as  in  the 
United  States  a  decrease  in  the  illuminating  capacity  and  an 
increase  of  explosions  has  been  recorded.  The  oil  people  claim 
that  this  is  only  due  to  the  introduction  of  the  Ohio  oil,  which 
they  have  not  yet  learned  to  refine  as  well  as  the  Pennsylvania 
oU. 


NATURE   AND   EFFECT   OF   TRUSTS.  69 

objectionable  restriction,  wliicli  have  not  been 
without  foundation.  In  the  period  of  lively  de- 
mand, the  trusts  have  attempted  to  brinsf  about 
a  great  rise  in  prices  by  diminisliing  tlic  sup[)ly. 
I>ut  these  attempts  at  corners  have  always  been 
of  only  a  temporary  nature.  Tlie  more  far-seeing 
and  successful  administrators  liave  begun  to  real- 
ize the  boomerang  character  of  such  attempts, 
and  to  take  the  position  that  tlie  greatest  earnings 
are  always  derived  from  tlie  production  of  a  stead- 
ily increasing  quantity.  On  the  other  hand,  they 
naturally  try  to  prevent  a  disastrous  inflation  of 
the  market. 

The  most  vigorous  attacks  arose  from  the 
alleged  attitude  of  the  combination  towards  the 
regulation  of  })rices.  It  has  been  objected,  and 
sometimes  proved,  that  the  trusts  keep  prices  im- 
moderately high  for  the  consumers,  and  pay 
immoderately  low  prices  to  the  producers  of  raw 
materials.  So,  above  all,  the  Sugar  'i'rust.  It  is 
alleged  that  it  arbitrarily  dictates  prices  on  its 
])urchases,  and,  with  the  aid  of  the  tariff,  sells 
at  priees  which  yield  a  greater  profit  to  tiu- 
reliiier  than  eould  be  obtained  under  free  eom])e- 
titioii.^ 

'  Tliis  was  admitted  by  Mr.  Ilavenieyer  before  the  iiivestifjat- 
ing  committee  of  tlie  United  States  Senate,  Juue  15,  18!I4.  Vide 
diagram  on  p.  7.]. 


70  INDUSTRIAL   COMBINATIONS. 

But  experience  has  taught,  and  probably  will 
make  it  more  and  more  apparent,  that  in  the 
long  run  only  those  trusts  are  successful  which 
succeed  in  steadily  cheapening  and  improv- 
ing their  product.  Whenever  they  have  raised 
prices  unwisely,  competition,  allured  by  the 
prospect  of  great  gains,  has  arisen  at  once  to 
such  an  extent  as  to  endanger  the  very  existence 
of  the  undertaking.  The  Starch  Trust  has  at- 
tempted for. a  while  to  keep  prices  unreasonably 
high,^  and  in  consequence  of  the  enormously 
increased  competition  was  at  one  time  believed  to 
be  on  the  verge  of  ruin. 

It  cannot  be  denied  that  the  prices  of  raw 
material  have  in  some  instances  been  depressed. 
The  United  States  Leather  Company,  Avliich  con- 
trols all  the  sole-leather  tanneries  of  the  country  as 
far  as  Texas,  succeeded  in  reducing  prices  imme- 
diately after  its  appearance  in  the  markets  of  Chi- 
cago and  Kansas  City.  It  maintains  a  purchas- 
ing agent  in  Chicago.  In  the  face  of  the  ring 
of  packers  it  does  not  seem  to  have  violently 
changed  the  dynamics  of  supply  and  demand,  but 
only  to  have  readjusted  them.  The  American 
Tobacco  Company  is  said   to  have  depressed  the 

1  BradstreeV s  Archives. 


NATURE   AND   EFFECT   OF   TRUSTS.  71 

purchasing  price  of  cigarette  tobacco  in  the  leaf 
by  several  per  cent  immediately  after  it  began 
business. 

But  we  also  observe  a  tendency  in  the  opposite 
direction.  With  the  increase  of  the  cotton  oil 
production,  the  price  of  cottonseed,  Avhich  the 
trust  had  at  first  somewhat  depressed,  rose  much 
above  the  former  level. ^  The  trusts  urge  in  their 
defence  that  in  consequence  of  their  efforts  to  in- 
crease consumption,  the  producers  are  given  the 
opportunity  to  dispose  of  much  more  raw  mate- 
rial, and  that  thus,  in  the  end,  tliey  will  enjoy  an 
increase  of  total  profits,  even  where  prices  are 
reduced. 

The  assertion  as  to  the  increase  of  prices  is  un- 
deniably justified  in  certain  instances.  Hut  the 
possibilities  as  well  as  the  consequences  of  such 
enhancement  have  certainly  been  exaggerated. 
Only  a  small  increase  of  prices  is  possible  with- 
out danger.''^  On  tlie  otlicr  liaiid,  trusts  uiKloiibl- 
edly  can  prevent  a  collapse  of  jjrices,  and  they  can 
temporarily  raise  prices  slightly,  and  pocket  larger 


1  Report  of  fourth  annual  meeting  of  the  stockholders  of  the 
American  Cotton  Oil  Company,  August  31,  I8i)3.  In  18'J4  the 
enormous  crop  again  reducetl  the  prices  for  cottonseed. 

'■^  Jenks  sets  forth  in  detail  these  dangers:  Rise  of  new  com- 
petitors, diminished  consumption,  etc. 


72  INDUSTRIAL   COMBINATIONS. 

profits  in  consequence  of  their  improved  methods 
of  production.  Within  the  range  of  common 
market  prices  the  cost  of  production  under  ordi- 
nary conditions  and  the  normal  rate  of  profit  may 
fluctuate  at  the  expense  of  each  other.  Produc- 
tion under  tlie  most  advantageous  economic  con- 
ditions yiekls  an  extra  profit  to  the  individual 
undertaker.  Whether  under  existing  conditions 
of  distribution  the  community  at  large  should 
share  in  this  extra  profit,  certainly  is  open  to  dis- 
cussion. Jenks  declares  that  the  combinations 
have  occasionally  attempted  to  secure  more  than 
this  legitimate  extra  profit,  and  that  the  establish- 
ing of  trusts  resulted  in  a  temporary  increase  of 
prices.  The  general  range  of  prices,  as  given  in 
his  article,  for  petroleum,  sugar,  and  spirits,  raw 
material  and  product,  may  be  seen  from  the  fol- 
lowing table  and  diagrams. ^ 

All  well-managed  and  successful  trusts  have 
thus  far  attempted  to  progress  through  steadily 
im})roving  their  plant  and  affording  increased 
facilities  to  their  customers.  None  have  suc- 
ceeded in  securing  an  absolute  and  lasting  monop- 
oly, in  spite  of  the  protective  system.  As  soon  as 
a  competitor  sees  an  opportunity,  he  makes  use  of 

1  Jenks'  "Capitalistic  Monopolies,"  pp.  ■491-493,  497. 


NAT?URE   AND    EFFECT   OF   TRUSTS. 


73 


AVERAGE  ANNUAL  PRICE  IN   CENTS    OF  REFINED    AND 
CRUDE  PETROLEUM. 


Years. 

Price  of  Crude. 

Price  of  Refined. 

Difference. 

1870     .... 

9.19 

26. .35 

17.16 

1871 

10.52 

24.24 

13.72 

1872 

9.43 

23.59 

14.16 

187.3 

4.12 

17.87 

13.75 

1874 

2.81 

12.98 

10.17 

1875 

2.90 

13.00 

10.04 

187G 

5.99 

19.16 

13.17 

1877 

5.68 

15.44 

9.76 

1878 

2.76 

10.76 

8.00 

1879 

2.04 

8.08 

6.04 

1880 

2.24 

9.05 

6.81 

1881 

2.30 

8.01 

5.71 

1882 

1.87 

7.39 

5.52 

1883 

2.52 

8.02 

5.50 

1884 

1.99 

8.15 

6.16 

1885 

2.11 

7.93 

5.82 

1886 

1.69 

7.07 

5.38 

1887 

1.59 

6.72 

5.13 

1888 

2.08 

7.49 

5.41 

1889 

2.24 

7.11 

4.87 

1890 

2.06 

7.30 

5.24 

1891 

1.67 

6.85 

5.18 

1892 

1.32 

6.07 

6.76 

1893 

1.50 

5.22 

4.72 

74  INDUSTRIAL   COMBINATIONS. 

it,  even  against  the  almighty  Standard  Oil  Trust. ^ 
A  combination  of  independent  oil  refiners  has 
recently  attempted  direct  exports  to  Europe.  A 
new  pipe  line  has  been  built,  —  the  United  States 
Pipe  Line,  —  and  the  Columbia  Oil  Company, 
which  controls  it,  has  successfully  combined  a 
number  of  smaller  oil  refineries.  They  own  three 
pipe  systems  for  refined  oil,  tank-plants  and  tank- 
steamers.  They  ship  their  oil  regularly  to  cus- 
tomers in  London,  Amsterdam  and  Mannheim. 
It  seems  very  likely  that  this  attempt  will  finally 
lead  to  an  understanding  and  combination. ^ 

The  rise  of  the  Columbia  Oil  Company  and  the 
fact  that  the  Standard  Oil  Company  does  not  OAvn 
a  considerable  part  of  the  oil  lands,  is  said  to  have 
led  to  the  failure  of  the  American-Russian  nego- 
tiations of  ISOtt.  When  the  question  of  a  division 
of  the  world  was  discussed  in  Paris,  the  Standard 
Oil  Company  could  not  comply  with  the  con- 
ditions insisted  on  by  the  Russians.  The  latter 
required  evidence  that  the  Standard  Oil  Com- 
pany  has   successfully    checked    all    competition. 

1  Vide  L.  G.  McPherson  "  The  Meaning  of  Corporations  and 
Trusts,"    Popular  Science  Monthly,  July,  1894,  p.  297. 

2  Tollos :  "  Nachtrag  zu  der  Abhandlung:  Cartelle  in  Russ- 
land,"  in  Schriftcn  des  Vereins  fur  Socialpolitik,  Vol.  II.  2, 
p.  325. 


NATURE    AND    EFFECT    OF   TRUSTS.  75 

The  Americans  asked  for  a  stay  of  proceedings 
until  tliey  slionld  have  dealt  with  the  Colundjia 
Oil  Company.^ 

The  Cotton  Oil  Coni[)any2  can  maintain  its  posi- 
tion only  by  the  continuous  improvement  and  en- 
laro-einent  of  its  plant  and  the  cheapeninfj-  of  its 
lU'oduct.  Again  and  again  independent  competi- 
tion crops  up  from  among  a  class  which  detests 
"  serfdom"  in  large  undertakings.  A  new  south- 
ern cotton  oil  com})any  has  been  established.  In 
sugar  refining,  C'laus  Spreckels  originally  started 
a  number  of  refineries  in  San  Francisco  and  Phil- 
adelphia, to  compete  with  the  trust.^  Later  he 
consolidated  with  the  trust.  But  there  are  still  a 
small  number  of  independent  refineries,  and  two 
larger  ones  are  nearly  com[)leted.* 

How  far  some  trusts  have  gone  in  their  at- 
tempts to  ward  off  comi)etition  is  shown  l)y 
numerous  exam])les. 

The  Distilling  and  Cattle  Feeding  Company 
lias  tried,  tlii'oiigh  its  secretary,  to  bribe  oiu^  of 
the   pul)Hc  gangers.      Tlie  latter,   wliile    pertbrm- 

1  Vide  ibid.  -  Vide  Ix'iow. 

8  Vide  Clans  Spreckels'  testimony,  United  Stiites  House 
Report,  50tli  Congress,  No.  8112,  p.  172. 

*  It  is  difficult,  however,  to  ascertnin  wlu'tln'r  in  <iiie  form  or 
another  these  are  not  connected  with  tlie  trust,  and  are  not 
built  only  to  preserve  the  semblance  of  competition. 


76  INDUSTRIAL   COMBINATIONS. 

ing  his  official  duties,  was  to  place  a  bomb  under 
one  of  the  alcohol  tanks  in  the  Chicago  distillery 
of  its  most  dangerous  competitor.  ^ 

In  the  petroleum  business,  an  oil  dealer  in 
Buffalo  attempted  to  trade  with  the  competitors 
of  the  Standard  Oil  Company,  who  made  him 
cheaper  offers.  After  a  while  the  Standard  Oil 
agent  came  and  told  him  tliat  unless  this  should 
be  stopped,  an  office  would  be  opened  to  undersell 
him  until  he  should  be  ruined.  To  indemnify 
itself,  the  Standard  Oil  Company  would  raise  the 
price  of  oil  correspondingly  in  certain  zones 
around  Buffalo.  Thereupon  the  merchant  thought 
it  better  to  resume  relations  with  the  Standard 
Oil  Company,  in  spite  of  its  higher  prices. ^ 

Where  it  was  impossible  to  overcome  the  com- 


1  Vide  report  on  the  Whiskey  Trust  investigation,  House  Re- 
port No.  2600,  pp.  16-30  and  63.  No  doubt  is  left  as  to  the 
truth  of  this  fact.  There  is  evidence  that,  in  case  of  the  gang- 
er's compliance,  the  machine  was  constructed  so  as  to  blow  him 
up  at  once  with  the  tank,  and  thus  to  secure  his  silence.  In 
spite  of  the  unmistakable  proofs,  the  parties  interested  suc- 
ceeded in  having  a  suit  against  them  dropped.  It  was  also 
testified  that  they  were  well  prepared  for  the  "accident,"  and 
had  entered,  with  this  in  view,  into  heavy  stock  speculation, 
in  the  expectation  of  a  bull  move  after  the  annihilation  of  the 
largest  competitor.  Vide  also  the  story  of  the  "  Buffalo  Explo- 
sion" in  Lloyd's  "  Wealth  against  Commonwealth,"  p.  250. 

2  Vide  Lloyd,  ib. 


NATURE    AND   EFFECT   OF   TRUSTS.  77 

petition  by  the  usual  means,  special  systems  were 
devised  to  secure  the  continuous  patronage  of 
customers.  Thus  originated  the  rebate  systems 
in  the  cigarette  and  alc(jhol  trade.  The  trust 
grants  to  its  customers  a  rebate  of  5%-7%,  or 
other  inducements,  in  case  they  are  able  to  prove 
that  witliiu  a  given  time  they  have  bought  their 
entire  supply  from  it.  To  secure  effective  con- 
trol, the  rebates  are  not  paid  until  after  a  certain 
period  and  the  filing  of  an  affidavit  that  the  cus- 
tomer has,  in  the  interim,  not  bought  elsewhere. 
Since,  meanwhile,  new  purcliases  are  concluded, 
the  interest  of  the  customer  to  continue  the  le- 
lation  is  constantly  kept  up.^  Tliis  system  has 
been  upheld  b}^  the  courts,  wliilst  a  pledge  to 
deal  exclusively  with  a  single  jiarty  was  adjudged 
illegal,  and  consequently  not  )i(iniittcd.'^ 

For  the  reasons  given  a))ovi',  the  author  does 
not  care  personally  to  undertake  tliat  most  diffi- 
cult task,  tlie  investigation  of  jiriccs.  Dodd  and 
(iunton    show    decreases,    .Icnks    iiu-icases,    as    a 

1  Voucher;  cf.  Appendix  X  and  X  a. 

-  Its  enemies  n'i)ri);xcheil  llic  Wiiisitcy  Trust  for  indemnifyini; 
itself  by  a  sudden  raise  in  prices  as  soon  as  tlie  reliate  list  had 
reached  lii.sj;h  lii;ures.  Tiie  customers  in  tliat  case  could  not  help 
acceptint;  the  measure.  The  trust  denies  the  trutli  of  this  charge, 
and  <leclarcs  that  it  does  not  chaniri'  its  prices  except  in  connec- 
tion with  the  situation  of  tiie  market. 


78  INDUSTKIAL    COMBINATIONS. 

result  of  combination.  A  glance  into  the  excel- 
lent and  most  valuable  publication  of  the  United 
States  Senate  on  wholesale  prices,  teaches  that, 
leaving  local  and  temporary  fluctuations  out  of 
the  question,  the  trusts  have  at  least  not  stopped 
everywhere  the  reduction  of  prices  in  the  industrial 
]n-oducts.  0]ie  might  feel  encouraged  to  believe 
that  they  will  by  and  by  bring  about  a  state  of 
stable  equilibrium  at  a  generally  lower  level; 
though  Jenks  declares  that  thus  far  the  friends  of 
the  combinations  have  more  often  talked  about 
possibilities  in  this  direction  than  shown  that 
anything  has  been  actually  done. 

V.  The  following  table  shows  the  amount  of 
ca[)ital  and  funded  indebtedness  of  the  most 
important  industrial  trusts.  It  may  be  noted  that 
the  amount  of  capitalization  does  not  correspond 
at  all  to  the  actual  value  of  the  undertakings  at 
the  time  of  their  establishment. 


NATURE   AND   EFFECT    OF   TRUSTS. 


79 


(The  bracketted  figures  give  the  amount  of  authorized  capital.) 


American  Cotton  Oil  Co. 


American  Soda  Fountain  Co. 
American  Straw-Board  Co.  . 

American  Sug-ar  Kefining  Co. 

American  Tobacco  Co.      .     . 

American  Type  Founders'  Co 
Diamond  Match  Co.     .    .    . 
Distilling  and  Cattle  Feeding  Ci 

National  Lead  Co.    .     . 

National  Linseed  Oil  Co. 

National  Starch  Co. 


New  York  Biscuit  Co. 
United  States  Cordage  Co. 
United  States  Leather  Co. 

United  States  Rubber  Co. 


Common 
Stock. 


(  (21,0'J2,0itil) 
"(   20,'237,I(10 

1,2.5(1,000 

6,000,000 

(  (37,500,000) 
'l   30,773,000 

j  (21,000,0(10) 
■(    17,900,000 

5,000,000 

9,000,000 

35,000,000 

(  (15,000,000) 
"(   U,90.5,4(JO 

18,000,000 

(   (5,000,000) 
"(    4,4.50,700 

j  (10,000,000) 
(       9,000,000 

20,000,000 

(  (60,000,000) 


Preferred 
Stock. 


J  (25,000,000) 
I   20,  ICG, 000 


(15,000,000) 
10,19s,GOO 

2,.500,000« 


(37,500,000) 
30,773,000 

(14,000,000) 
11,1»35,(J00 

4,000,000 


(15,000,000) 
14,904,000 


(15,.500,000)2 
4,0GG,200 


14,000,000' 
(G0,000,000) 


(25,000,000) 
19,400,500 


B(iNr>Ei) 
Indehtku- 

NESS. 


(5,000,000) 
3,5GG,000 


1,OS1,000 
(10,000,000) 


(8,000,000) 
3,500,000 


3,000,000 

(4, .500. 000) 
3,S37,OO0 

1,341,000 

(7.5OG,O00) 
G,07G.OOO 

(10,000,000) 
G,000,000 


'  ♦  1,250,000  first  preferred,  ditto  second  preferred. 

2  (3,000,000)2,219,400  first  preferred,  (2,r>00,000)  l.aiG.OOO  second  preferred 
stock. 

'  6,000,000  guaranteed  C%  stock  ;  8,000,000  preferred  stock. 


80  INDUSTRIAL   COMBINATIONS. 

The  Standard  Oil  Trust  originally  was  estab- 
lished with  870,000,000  trust  certificates,  which 
c::ceeded  the  actual  value  by  at  least  100%. 
Later,  it  has  increased  its  capital  by  distribut- 
i.ig  a  25%  stock  dividend  among  its  certificate 
holders.  At  the  time  of  its  dissolution,  it 
was  stated  to  have  a  nominal  capital  of  $102,- 
500,000,  on  which  it  distributed  12%  per  annum; 
this  dividend  was  equal  to  at  least  30%  of  the 
real  capital.  Besides,  it  is  said  to  have  accu- 
mulated a  considerable  amount,  by  which,  in  one 
form  or  another,  its  security-liolders  will  be  bene- 
fited. The  Cotton  Oil  Company  and  all  the 
others  are  likewise  overcapitalized  by  200%- 
500%.  Not  only  the  former,  but  also  the  future 
earning  capacity  has  been  taken  into  account. 
The  original  valuation  is  not  based  upon  the 
actual  property,  but,  to  a  larger  extent,  upon 
good  will,  rights,  and  prospects.  In  most  of 
the  trusts  the  common  stock  originally  repre- 
sented only  water.  The  quotations  show  that, 
in  the  opinion  of  the  exchanges,  the  anticipated 
increase  of  value  has  not  always  been  realized. 
No  information  can  be  got  about  the  present 
condition  of  the  Standard  Oil  Trust,  for  it  has 
been  formally  dissolved  (vide  infra). 

The  table  on  the  next  page  shows  the  dividends 


NATURE   AND   EFFECT    OF   TRUSTS. 


81 


B 

as 

c 
c 

c! 

B 

» 

S- 

a 

O     -! 

a 

o 

c 

B 

c 

o 

o 
B 

O 

to 

!2- 
£. 

p 

3 

% 
p. 

0 

p 

0 

3 

£. 

re 
P 

c 

0 

3' 
p 

B 

o. 
s 

s 

re 

3' 
1? 

e 
p 

0 
3 
p. 

p 

3- 

> 

re 
p 
H 

re 

»!! 

o 
c 

3 
p. 

> 

B 

re 
§ 

i 

p 

> 

B 

re 

p 
B 

re 
B) 
B 
5' 
(W 

> 

B 

re 

» 
3 
/: 

3 

S3 

2 

> 
re 
P 

3 

0 

0 

B 

> 

•p 

B 

5' 
§ 
o 

3 

o' 

o 
£. 

a 

a. 

c 
o 

1 

_ 

'1 
II 

,  3 
'■3= 

si 

.  c 

1 

CO 

0 

re 
re 

■33 

re 

.s-'^p 

=  2:3  2. 

'•  i.     til 

0  g-cg 

re       p  — 

•p  s  «.'"= 

B  S  &"3 

2  §"2  2 

CO 

2 
p 

3 
3 
C 
P 

5' 

re 

re 

S 
re 

CD 

to 

S 

B 

55 
o 

3 
p. 

o 

5" 

'J. 

11:: 

B   ii 

a- » 

'A 

o  .. 

If 

i 

c 

.     3 

1 

j 
J 

1 

1 
r 

1 

<i 

> 

J. 

s 

s 

re 

re 

p 

0 

^  ? 

5" 

re 

1 

i 

J9 

0  s 
li 

p 

?*" 

M  p 

0 
re 
p_ 

1 

1 

•1- 
1 

re  ,  _E. 

Slit 

5   T    Of 
■  "  C  P 

p 

1.- 

r 

1 

re 

5" 

re 
»5 

< 

r 

3 

5" 
r 

55 

0 

re" 
3 

82 


INDUSTRIAL  COMBINATIONS. 


QUOTATIONS  OF  TRUST 


1885 

1886 

1887 

Names. 

1 

o 

si 

.9 

o 
Q 

■a 

o 

1^ 

ti 

a 

o 

5 

1 

o 

sib 

•i 

o 

3 

West'n  Union  Tel. 

Amer.  Cotton  Oil 

Distill'g  &  Cat.  F. 
National  Lead    . 

Sugar  Refineries 

Nat.  Linseed  Oil 
Chicago  Gas  .    . 

National  Cordage 
Amer.  Tobacco  . 

National  Starch . 

U.  S.  Rubber     . 
U.  S.  Leather     • 

81f 

53i 

— 

80^ 

m 

— 

81| 
64 1 

67h 
23^ 

76  ^ 
29| 

(The  table  is  compiled  from  the  volumes  of  BradstreeVs  1886-94.) 


NATURE   AND   EFFECT   OF   TRUSTS.  83 

CERTIFICATES   AND   STOCKS. 


ISSS 

18S9 

1890 

1891 

J3 
ho 

'p 

o 

o 

5 

J3 

o 

"if 

C 

k-1 

^ 

J3 

K 

4-^ 

0 

c 
0 

86| 

57| 

70| 
25 

83| 
52 

88f 

611 

47| 
35 

12G 

81f 

27 

38  i- 
17 

45 

831 

311 

39^ 
20 

59|^ 

87 

f  32 
1    75 
I  34,1 
49 

241 

r95 

1791 
50 
65 

71f 
10 

271 

13 

S6l 

141 

48 
48 
36 
32 

76 1 
16 
32 
16 
42 1 

17 

57  i 
37' 

85i 
351 
65 

2621 

21i 

931 
*98 
42f 
71| 
jl04 

'[iio.i 

76 

15J 

331 

14 1 

57^ 

85 

18J 

34' 

73f 

97 

83| 
34 1: 
65 

60^ 
18| 

84  .V 
93" 

7H 

94^ 

100| 

1  1890,  trust  ehaiiKi'd  to  conipaiiy  :  lirst  row  common  stock,  second  row  pre- 
ferred stock,  third  row  trust  receipts. 

2  1891,  trust  cliaiifred  to  comi)any. 

'  1890,  trust  chaiifrod  to  eoiiii.any,  row  1  stock,  row  2  trust  receipts. 
*  1891,  row  1  coinmoii  stock,  row  2  preferred  stock. 

5  Row  1  coininou  stock,  row  2  preferred  stock.    Keorganized  189-4 ;  has  now 
the  name  United  States  Cordage. 


84  INDUSTRIAL   COMBINATIONS. 

QUOTATIONS  OF  TRUST  CERTIFICATES  AND  STOCKS. 


1892 

1S93 

1894 

Names. 

0) 

o 

a 
o 
3 

.3 

0 
h4 

a 
0 

3 

■1 

5 

% 
0 

ti 

0 

0 

G 

W.  U.  Tel.      . 

lOOf 

82 

95f 

101 

671 

82 1 

921 

80t 

87 

471 

32  > 

43| 

51i 

24 

28.1 

34 1 

211 

23 

Am.  Cot.  Oil  . 

871 

63', 

821 

84 

50 

H 

791 

63 

68^ 

Distill'g&C.  F. 

72,1 

44  J 

66,1 

mj 

10} 

23 

30| 

7f 

10 

Nat.  Lead  .     . 

'|99| 

30| 
81 

46 

93.1 

52i 
95J 

18 
48 

23 

45 

921 

22 
67 

37f 

84 

Sugar  Refin.   . 

115| 
I07f 

781 
90^ 

1111 
991 

1.341- 
106 

613 

661 

81 
84 

114^ 
1001 

755 
79  f 

89| 
901 

Nat.  Linseed  Oil 

45 

27 

41 

41 

141 

25 

25 

14 

— 

Chicago  Gas  . 

99 1 

71| 

89 1 

94^ 

39 

61f 

80 

58  f 

74 

Nat.  Cordage  . 

J-  1421 
1123^ 

91 1 
100 

138L 
1121 

275 
269 

12 
42 

20 

23| 
41 

5i 
81 

7| 
12 

Am.  Tobacco. 

ri26 

1ll5 

106 
90 

120 
110 

121 
1101 

43 

75 

75 

92 1 

107 
110 

691 
91i 

98| 

Nat,  Starch     , 

r  46i 
4    106 
1109 

29. i 
100 
97 

31 

102 
102 

34 1 
103^ 
103 1 

6 
49 
23 

— 

12 
56 
35 

51 
40 ' 
20 

— 

U.  S.  Rubber . 

48| 

36| 

45 

reof 

I991 

17 
50 

90 

45.} 

99|: 

ri2 

l68| 

33 

79f 
8 

44| 

U.  S.  Leather 

~ 

" 

~ 

" 

521 

60f 

1  Row  1  preferred,  row  2  common  stock. 

*  Both  rows  include  new  assessment  of -f  10. 

'  Row  1  common  stock,  row  2  preferred  stock. 

*  Row  1  common  stock,  row  2  trust  preferred  stock,  row  3  second  preferred 
stock. 

s  Row  1  common  stock,  row  2  preferred  stock. 
8  Row  1  common  stock,  row  2  preferred  stock. 


NATURE   AND   EFFECT    OF   TKUSTS. 


85 


QUOTATIONS  OF  STOCKS  IN  1893.1 


Jantary. 

Febkuary. 

March. 

Names. 

o 

Hi 

s 

9 

>3 

Tc 

? 
0 

Amer.  Cotton  Oil  Co. 

Pref 

Amer.  Sugar  Ref.  Co. 

Pref 

47| 
83  ij 

im 

104', 

121' 

110^ 

94^ 

66 1 
114| 

143 1 

1181 

41 

521 

96 

34| 
103} 
103:1 
199; 

84.1 

50 " 

4QI 

99 
101 

421 
82 

111k 

99  .^ 

113' 

105| 

85| 

36,1 
109i 

135} 

llO.l 

38 

44  .V 

92  j 

25.1 
102' 

96.', 
196.' 

83" 

50 

m 

941 
94-' 

51 

84 
134:J 
104 

1171 
108 
92| 

4U 

ml 

147 
75 

117 

40 
50 
96 
27 

101 
93,1 

198  .i 
841 
56.', 
46 1, 
97' 

m 

45| 

80 
111,1 

993 
104 
104J 

851 

32 
103  ,i 

136 

57 

109 

36  ,V 
38  .V 
88 
20,1 
89  > 
82 
192,', 
83  j 
54| 
43 
92,1 
94', 

5H 
83} 

126  i 
102 
107  i 
106" 
91^ 

zn 

107f 

64.1 

111 

372 
42 1 

911 
24; 

90 

197] 

83:5 

58,1 
99 

46 

79 
x92^ 
x94 

Amer.  Tobacco  Co.    . 
Pref 

90 
993 

Chicago  Gas  Co.    .     . 
Dividend  scrip.  .     . 
Distill'g  &  Cat.  F.  Co. 
General  Electric  Co. 

Pref 

National  Cordage  Co. 
New  certificates 
1st  assessment  paid 
2d  assessment  paid 

Pref 

1st  assessment  paid 
2d  assessment  paid 
Nat.  Linseed  Oil  Co.  . 

Pref 

Nat.  Starch  Mfg.  Co. 

1st  pref 

2d  pref 

Pullman  Palace  Car  . 
Silver  RuHinn  Certifs. 
Southern  Cotton  Oil  . 
U.  S.  Rubber  Co.  .     . 

Pref 

Western  Union  Tel.  . 

x84| 

30 

98 

57i 

105^ 

34| 
35 
78^ 
20J 

82 

1901 

82^ 

42 
93 
92  i 

'  C'orniiilod  from  tho  Commercial  and  Financial  Chronicle,  Vol.  Ivlli,  No. 
1489. 


86  INDUSTRIAL   COMBINATIONS. 

QUOTATIONS  OF 


April. 

May. 

June. 

Names. 

Tt 

h-1 

5 

o 

To 

1 

Amer.  Cotton  Oil  Co.     . 

50 1- 

421 

44 

.30 

38 

33 

Pref 

82  f 

78 

781 

68 

711 

68 

Amer.  Sugar  Ref.  Co.    . 

107| 

98.1 

991 

62 

93 

771 

Pref 

lOOi 

96 

961 

68 

88]- 

77 

Amer.  Tobacco  Co.    .     . 

101 

76  .V 

78 

58 

67 

531- 

Pref 

-1021 

102 

961 

881 

88 

84 

Chicago  Gas  Co.    .     .     . 

93 

82f 

83f 

59 

741 

65} 

Dividend  scrip  .     .     . 

— 

— 

— 

— 

Distill'g  &  Cat.  F.  Co.    . 

331 

221 

25| 

13 

241 

151 

General  Electric  Co.  .     . 

108  f 

97 

97? 

58 

75t 

65} 

Pref 

— 

— 



88 

88 

National  Cordage  Co. 

— 

— 

— 



— 

— 

New  certificates      .     . 

69 

57f 

57 

9} 

in 

n 

1st  assessment  paid 

— 



2d  assessment  paid  . 

— 

— 

— 

— 

— 

— 

Pref 

llOj 

101 

101 

39 

54 

40 

1st  assessment  paid 

— 

— 

— 

— 

— 

— 

2d  assessment  paid  . 

— 

— 

— 



— 

— 

Nat.  Linseed  Oil  Co. .     . 

37 

30 

31 

25 

22  J- 

191 

Nat.  Lead  Co 

44| 

36^ 

371 

26 

33 

27 

Pref 

87f 

79f 

81 

67 

721 

651 

Nat.  Starch  Mfg.  Co.      . 

28 

191 

17 

12 

lOf 

7* 

1st  pref 

93 

93 

87 

80 

60 

60 

2d  pref 

881 

85 

— 

— 

62 

25 

Pulnian  Palace  Car    .     . 

206 

1971 

180 

170 

174| 

164 

Silver  Bullion  Certifs.     . 

83 1,^ 

821 

841 

84 

83.1 

62 

Southern  Cotton  Oil  .     . 

— 

44 

43  f 

— 

— 

U.  S.  Rubber  Co.  .     .     . 

60f 

5U 

57f 

33 

45 

341 

Pref 

99 

x90 

91 

69 

811 

70 

Western  Union  Tel.   .     . 

96| 

88J 

881 

801 

84 1- 

791 

NATURE   AND    EFFECT   OF   TRUSTS.  87 

STOCKS  IN  1893. 


Jtly. 

August. 

September. 

October. 

November. 

December. 

1 

1 

S 

1 

^ 

3 

0) 

-a 

S 

1 

.a 
be 

is 

0 

353 

24 

331- 

25 

36 

32 

39} 

331 

381 

29 

31 

261 

66} 

50 

65 

54} 

72 

64 

771 

69 

771 

70 

69} 

60 

85} 

61} 

86 

64  i 

93| 

82 

105.1 

861 

1021 

80 

m 

x78^ 

82} 

66  i 

85  .V 

68 

90 

82} 

94 

86 

921 

811 

851 

x8U 

65 

43 

731 

50 

80 

69 

92 

771 

92  f 

791 

821 

68 

83 

75 

821 

75 

92 

86 

100 

93 

991 

971 

991 

90 

70f 

39 

55 

40 

64} 

52J 

69} 

561 

68 

68} 

691 

59^ 

— 

— 

— 

— 

1.30 

1.10 

1.25 

1.10 

1.50 

1.15 

140 

120 

24} 

12 

23| 

14 

27 

18  J 

35} 

25  j 

33} 

251 

30} 

18f 

72i 

30 

51i 

36 

49} 

37  J 

52 

40} 

481 

331 

39  J 

31i 

11 

Vr 

— 

— 

— 

— 

— 

— 

— 

— 

— 

— 

15 

10 

llf 

7 

— 

— 

— 

— 

— 

— 

— 

— 

— 

— 

23^ 

13 

30} 

m 

29} 

20} 

m 

181 

201 

16^ 

69 

48 

35 
46 

22 

46 

— 

— 

— 

— 

— 

— 

— 





69 

54 

65t 

46 

54', 

49 

48  1  42 

2H 

14  .V 

19J 

14^ 

191 

16.1 

19 

17i 

20} 

17 

29  1  20} 

31 

18,1 

29i 

2U 

32.' 

24,1 

20^ 

25} 

281 

223 

26 

21 

69 

48 

69.1 

53 

74  > 

67.1 

801 

70 

78 

63 

71 

63 

9 

6 

H 

6 

Hi 

8 

lli 

8 

12 
49 

10} 
49 

61 

6 

31 

23 

25 

23 

— 

— 

— 

— 

55 

40 

— 

— 

163' 

133 

155 

132 

173} 

155 

177 

166 

175} 

1701 

175  |162 

75^ 

69 

78J 

72J 

75} 

73 

74 

73| 

70.1 

701 

— 

— 

38 

25 

29 

17 

35 

29 

46 

29} 

44} 

38 

473 

39} 

77 

65 

68 

51 

77 

75 

891 

75 

89 

831 

90} 

84 

83 

67  J 

81 

^^ 

843 

78 

93| 

80} 

91.1 

851 

92', 

81 

bb  INDUSTRIAL   COMBINATIONS. 

paid  by  the  above  companies  in  the  years  after 
1890.1 

The  opinion  of  financial  circles  as  to  the  value 
of  securities  of  that  sort  may  be  seen  from  a  table 
of  quotations  for  a  longer  period;  a  third  table 
gives,  for  the  same  securities,  the  monthly  quota- 
tions during  the  panic-year  1893,  with  the  addi- 
tion of  a  few  other  leading  companies,  and  the 
price  of  silver  bullion  certificates  in  New  York. 

The  foregoing  tables  show  remarkable  features, 
which  will  be  discussed  later  from  a  general  point 
of  view.^ 

A  great  and  striking  difference  exists  in  the 
position  of  the  several  companies,  in  consequence 
of  their  methods  of  management.  Some  of  them, 
as  the  American  Tobacco  Company  and  the  Stand- 
ard Oil  Trust,  are  model  organizations,  which 
look  forward  only  to  a  continual  betterment  of 
their  position.     The  same  is  true  of  the  reorgan- 

1  From  BradstreeVs. 

2  The  financial  results  have  by  no  means  been  in  all  instances 
as  favourable  as  were  expected.  This  may  to  some  extent  be 
ascribed  to  the  enormous  salaries  voted  to  the  managers  by  the 
boards,  i.e.  their  friends.  A  disproportionate  amount  of  the 
earnings  is  absorbed  in  this  manner ;  and  this,  of  course,  ab- 
sorbs a  good  deal  of  the  benefits  derived  from  economies.  On 
the  other  hand,  it  is  argued  that  men  possessed  of  extraordinary 
business  ability  would  not  otherwise  be  induced  to  offer  their 
services. 


NATURE    AND   EFFECT   OF   TRUSTS.  89 

ized  Cotton  Oil  Company,  and  as  far  as  business 
management  is  concerned,  of  the  Sugar  Refining 
Company,  and  others.  Some,  however,  have  been 
subject  to  the  most  scathing  criticism.  Thus  far 
two  great  disasters  have  gone  on  record:  in  1889 
the  okl  Cotton  Oil  Trust  suspended  payments, 
and  on  May  4,  1893,  the  National  Cordage  Com- 
})any  went  to  pieces.  Both  were  ruined  through 
very  apparent  mismanagement.  The  managers 
misused  the  companies'  funds  for  gambling  pur- 
poses on  the  exchanges,  and  did  not  concern  them- 
selves with  the  development  of  legitimate  business, 
but  with  Credit  Mobilier  transactions,  and  specu- 
lations for  rapid  gains.  It  is  one  of  the  most  dis- 
astrous holes  in  the  corj^ioration  law  of  the  United 
States,  tliat  stock  com})anies  are  not  forbidden 
to  buy  or  sell  their  own  securities.  In  Europe 
such  transactions  have  been  punishable  for  many 
years.  It  has  occasionally  happened  in  the  United 
States  that  managers,  when  successful  in  opera- 
tions on  the  exclianges,  have  pocketed  the  i)rofits, 
but  when  unsuccessful,  have  thrown  tlie  loss  on 
the  stockholders. 

In  the  Whiskey,  Linseed  (^il,  and  Starch  trusts, 
actual  crises  have  not  yet  occurred;  but  in  1892 
the  Distilling  and  Cattle  Feeding  C<)in[)any  was 
very  near  the  verge  of  ruin,  and  to-day  it  is  again 


90  INDUSTRIAL   COMBINATIONS. 

a  question  whether  it  will  not  go  to  pieces  en- 
tirely. ^  The  two  others  were  both,  during  1893 
and  1894,  regarded  as  being  in  a  situation  but  little 
less  delicate. 

How  little  confidence  the  public  has  in  the  so- 
called  "Industrials"  may  be  seen  from  the  fact 
that  the  second  preferred  stock  of  the  American 
Tobacco  Company,  which  has  always  regularly 
paid  12%  dividend,  was  quoted  during  the  crisis 
not  much  above  60%.  Again,  there  was  the 
rapid  fall  in  values  by  which  the  disaster  of  the 
National  Cordage  Company  was  reflected  in  all 
the  other  trusts. ^  The  cordage  shares  fell,  be- 
tween May  1  and  May  7,  1893,  from  57  to  151, 
preferred  from  101  to  39.  General  Electric  com- 
mon declined  from  79|-  to  58  ;    American  Sugar 

1  Since  the  above  was  wi-itten  the  progi'ess  of  events  has  been 
rapid.  In  189J:  the  Eastern  wholesale  merchants  in  the  liquor 
traffic,  dissatisfied  with  the  business  methods  of  the  Distilling 
and  Cattle  Feeding  Company,  combined  and  started  distilleries 
of  their  own.  For  a  while  it  seemed  as  if  the  two  parties  were 
about  to  come  to  terms  again,  but  recently  the  war  has  been 
reopened.  The  leaders  of  the  Whiskey  Trust  declare  this  and 
the  recent  bad  times  to  be  the  causes  of  the  impending  disaster, 
which  they  propose  to  avert  by  a  new  assessment  on  the  stock. 
Their  opponents  think  the  troubles  are  due  to  inside  specula- 
tions on  the  exchanges. 

2  The  Financial  Bevieio,  1894,  pp.  105,  106 ;  The  Financial 
and  Commercial  Chronicle,  vol.  Iviii.,  May  7,  1893. 


NATURE   AND   EFFECT    OF   TRUSTS.  91 

common  from  99|-  to  62  ;  Chicago  Gas  from  83| 
to  59  ;  Whiskey  from  25|  to  13;  National  Lead 
from  37|  to  26;  Cotton  Oil  from  50^  to  30. i 

Before  going  into  a  further  discussion  of  the 
details,  we  must,  in  a  few  words,  touch  upon  the 
formal  changes  which  have  taken  place  in  conse- 
quence of  the  recent  anti-trust  legislation. 

1  The  Financial  lievieio,  1894,  pp.  105,  lOG ;  TJie  Financial 
and  Commercial  Chronicle,  vol.  Iviii.,  May  7,  1893. 


92  INDUSTRIAL   COMBINATIONS. 


CHAPTER  VI. 

THE  LATEvST  PHASE  OF  CORPORATION  LAW,  AND 
ITS  EFFECT  ON  THE  FORM  AND  NATURE  OF 
COMBINATIONS. 

I.  The  essential  provisions  of  the  anti-trust 
legislation  passed  in  the  different  states  are  sum- 
marized by  Mr.  Dodd^  as  follows  (the  word 
''  persons  "  being  used  for  "  persons,  corporations, 
associations,  and  partnerships,"  and  the  word 
"agreement,"  or  "attempt,"  for  "contract,  com- 
bination, conspiracy,  understanding,  arrangement, 
or  act  ")  :  — 

In  sixteen  states,  it  is  a  criminal  conspiracy  for 
two  or  more  persons  to  agree  to  regulate  or  fix  the 
price  of  any  article,  or  to  fix  or  limit  the  quantity  of 
any  article  to  be  manufactured,  mined,  produced, 
or  sold.  Regulating  and  fixing  prices  necessarily 
include  increasing  and  reducing  prices,  but  in  most 
of  the  statutes  these  are  also  specified  as  criminal. 

In  six  states,  it  is  a  crime  for  two  or  more 
persons  to  enter  into  any  agreement  whereby  "  full 

1  "Present  Legal  Status  of  Trusts,"  Harvard  Laio  Bevieiu, 
vii.  p.  164. 


COKPORATIOX   LAW.  93 

and.  free  competition  in  production  and  sale "  is 
prevented. 

In  two  states  and  one  territory,  it  is  a  crime  for 
two  or  more  persons  to  "  attempt  to  monopolize  " 
any  article. 

In  Nebraska,  two  or  more  persons  are  guilty  of 
conspiracy  if  they  agree  to  suspend  or  cease  the 
sale  of  any  manufactured  products,  or  if  they  agree 
that  the  profits  of  any  manufacture  or  sale  shall 
be  made  a  common  fund,  to  be  divided  among 
them. 

In  Texas  and  ]\Iississippi,  besides  the  crimes  of 
fixing,  regulating,  increasing,  and  reducing  prices, 
it  is  also  a  crime  for  persons  to  settle  the  price 
of  any  article  between  themselves,  or  between 
themselves  and  others. 

In  New  York,  it  is  a  crime  to  enter  into  any 
contract  whereby  competition  in  the  supply  or 
price  of  articles  in  common  use  for  support  of  life 
and  health  may  be  restrained  or  prevented  for  the 
purpose  of  advancing  prices.-' 

The  bias  of  public  opinion  against  trusts  proper 
was  bound  to  produce  some  effect ;  especially 
as   some    decisions    of   the    courts  ^   gave   rise    to 

1  Anti-Trust  Laws  of  the  United  States,  Illinois  and  Texas  ; 
Appendices  IV.-VIL 

^  People  versus  North  River  Sugar  Kelining  Company,  121 


94  INDUSTUIAL   COMBINATIONS. 

the  fear  that  the  judiciary  woukl  not  be  found 
willing  to  recognize  the  legality  of  the  "trust" 
agreements.  It  was  considered  wise  to  yield  m 
the  matter  of  form.  The  trusts  were  transformed 
into  companies.  Already  in  1887  Cook  pointed 
out^  that  although  in  New  York  and  several  other 
states  a  stock  company  could  not  own  the  stock  of 
other  companies,  this  has  always  been  permitted  in 
some  other  j^laces.  "Maine,  Connecticut,  and  New 
Jersey,  since  time  immemorial,  had  been  the  snug- 
harbour  of  roaming  and  piratical  corporations. 
Afterwards  they  were  outdone  by  Kentucky  and 
West  Virginia,  wliose  corporation  statutes  are 
marvels  of  alluring  attractiveness  for  the  incor- 
poration of  enterprises  located  in  other  states. "^ 
Seeing  what  financial  advantages  these  states 
enjoyed  in  consequence  of  their  liberality,  what 
large  revenues  they  drew  from  their  incorporated 
"guests,"  many  of  the  others  followed  them  in 
changing  their  legislation  and  practice.  As  citi- 
zens of  one  state  may  establish  a  stock  company 
in  any  other  state,  and  as  a  stock  company,  in 
consequence    of   the  interstate    comity^   is  free  to 

New  York,  582  ;  State  versus  Standard  Oil  Company,  30  U.  S. 
Kep.  279. 

1  "Trusts,"  p.  6. 

2  Cook,  "Corporation  Problem,"  pp.  107-110. 


CORPORATION   LAW.  95 

transact  business  all  over  the  couutry,i  —  with 
the  one  exception  of  ^'i^asj-public  corporations, 
such  as  railroads,  gas  companies,  etc., — it  has 
been  very  easy  to  find  a  new  and  more  com- 
fortable home  for  prosecuted  trusts. 

We  now  had  the  strange  spectacle  of  the  enact- 
ment of  the  most  severe  laws  against  trusts  and 
combinations  on  the  one  hand,  and  on  the  other 
of  a  transformation  of  the  corporation  law  which 
facilitated  a  remodelling  of  the  trusts,  and  their 
continued  transaction  of  business  in  the  state. 
Meanwhile  a  change  in  the  taxation  laws  was  pro- 
vided in  many  states,  favourable  to  foreign  corpo- 
rations. ^  This  removed  the  very  difficulty  which 
had  been  one  of  the  chief  reasons  why  originally 
the  form  of  "  trusts "  had  been  chosen  ;  the  old 
laws  of  several  states  would  have  compelled  a 
foreign  company  to  pay  taxes  on  its  full  stock 
or  transactions.  The  most  popular  states  for 
chartering  companies  are  at  present  New  Jersey 
and  Illinois.  The  former  lias  attracted  across  the 
river  nearly  all  corporations  doing  business  in 
New  York.  In  New  York,  the  courts  and  public 
opinion  are  in  favour  of  large  companies ;  but  the 
charter  is  too  expensive,  taxation  loo  high,  and 

1  Cook,  "  Stocks  and  Stockholders,"  §§  2:37-240. 

2  Cook,  "  Corpoi-atioii  Problem,"  pp.  102-107. 


96  INDUSTillAL   COaiBINATIONS. 

the  liabilities  of  stockholders  and  officers  are  too 
far-reaching.  In  New  Jersey  the  incorporation 
fee  is  one-fiftieth  of  one  per  cent  of  the  par  value 
of  the  capital  stock ;  the  annual  tax  is  one-tenth 
of  one  per  cent  of  the  same ;  and  a  charter  can 
be  obtained  for  "any  lawful  business  or  purpose 
whatsoever."  Only  one  director  need  be  a  resi- 
dent of  the  state  ;  the  amount  of  capital  stock 
is  unlimited  ;  there  is  no  liability  on  the  part  of 
the  stockholders  for  corporate  debts ;  property 
and  property  rights  can  be  made  the  basis  of  a 
stock  issue ;  and  annual  reports  of  the  business 
are  not  required  to  be  made  public.^  Similar 
provisions  are  contained  in  the  Illinois  law. 
But  the  proceedings  instituted  against  a  num- 
ber of  "  trusts  "  by  the  attorney -general  makes 
it  likely  that,  if  such  proceedings  continue,  the 
corporations  will  no  longer  feel  safe  in  Illi- 
nois ;  some  of  them  have  already  announced 
their  intention  to  abandon  their  Illinois  charter 
and  take  out  one  in  New  Jersey.  In  West  Vir- 
ginia, the  fee  is  only  $56 ;  the  annual  tax,  i^SO ; 
no  director  need  be  resident ;  annual  and  other 
meetings    may   be    held   outside    the    state,    etc. 


1  William  H.  Corbi?i,  "The  Act  concerning  Corporations  in 
the  State  of  New  Jersey,"  Jersey  City,  1891. 


COEPOKATION   LAW.  97 

"  Therefore  ^  all  the  tramp  and  bubble  companies 
seem  to  have  gravitated  to  her  jurisdiction." 
The  manufacture  of  corporations  for  the  purpose 
of  enabling  them  to  do  all  tlieir  business  else- 
where seems  to  be  the  policy  of  this  "young 
and  enterprising  state,"  and  it  has  become  the 
"Mecca  of  irresponsible  corporations."  But  the 
largest  corporations  have  nevertheless  preferred 
to  tins  charter  or  tliat  of  Kentucky  the  more 
expensive,  but  seemingly  more  respectable,  char- 
ters of  the  states  before  mentioned. 

II.  The  transformation  of  the  trusts  into  cor- 
porations has  been  mainly  brought  about  by  pro- 
ceedings of  a  formal  cliaracter.  A  former  trustee 
and  present  director  of  one  of  them,  has  told  the 
author  that  he  is  not  aware  of  the  slightest  change 
in  his  position,  or  in  its  meaning.  After  a  com- 
mittee had  decided  upon  the  preliminaries,  a 
charter  was  taken  out  ;  the  trustees  became  direc- 
tors ;  the  ol'licials  of  the  trust  were  appointed 
officers  of  the  new  company  ;  the  trust  certificates 
were  exchanged  for  shares,  through  the  agency 
of  some  trust  company,  on  the  basis  of  a  stipu- 
lated triangular  agreement.  The  parties  to  this 
agreement  were  the  trustees,  a  certilicate  holder's 

'  Cook,  "Stocks  and  Stockholders,"  p.  IG04. 
II 


98  INDUSTKIAL   COMBINATIONS. 

committee,  and  the  trust  company. ^  The  hitter 
issued,  sometimes  to  the  individual  companies, 
and  sometimes  to  the  trust  certificate  hoklers,  an 
amount  of  stock  of  the  new  company  represent- 
ing the  corresponding  value  of  trust  certificates 
deposited  with  it  for  that  purpose. 

Attempts  of  certain  individuals  hostile  to  trusts 
to  have  a  receiver  appointed  for  liquidating  the 
trust  affairs  (as  in  the  case  of  the  Standard  Oil 
Trust)  did  not  meet  with  the  approval  of  the 
courts.  All  former  trusts  have  passed  through 
this  metamorphosis  with  the  exception  of  the  Chi- 
cago Gas  Trust  (vide  supra),  and  of  the  Standard 
Oil  Trust,  whose  position  was  a  different  one, 
inasmuch  as  its  nine  trustees  owned  personally 
more  than  50%  of  the  total  capital  stock.  Their 
motion,  at  the  general  meeting  of  trust  certificate 
holders,  on  March  21,  1892,  to  dissolve  the  Stand- 
ard Oil  Trust,  and  to  restore  to  the  individual 
trust  certificate  holders  a  proportionate  share  in 
the  individual  companies,  was  practically  with- 
out significance.  The  proposition  was  accepted ; 
the  "equitable  interest"  of  the  trust  certificate 
holders  as  registered  in  the  books  of  the  comj^any 
was  retransformed  into  a  '•  legal  ownership  "  of 

1  Appendix  XI. 


CORPORATION   LAW.  99 

corresponding  amounts  of  stock,  and  recorded  in 
the  books  of  the  individual  participating  under- 
takings. All  previous  actions  of  tlie  trustees  were 
accepted  and  approved.  These  oliicers  were  com- 
missioned to  wind  up  affairs  in  such  way  as  they 
deemed  fit;  to  file,  as  '^  attorneys  in  fact,"  all 
necessary  papers ;  and  to  report  periodically. 
Four  months  after  the  passage  of  that  niotiou, 
the  voting  power  of  the  trustees  was  to  expire. 
In  September,  1893,  at  a  new  meeting,  informa- 
tion was  given  that  more  than  50%  of  the  trust 
certificates  had  been  exchanged  in  the  proposed 
manner.  Considering  the  fact  that  the  resolu- 
tions do  not  ask  for,  but  only  permit,  a  change 
of  the  certificates  ;  that  the  trustees  own  inoi-c 
than  50%  of  the  cai)ital  stock  as  their  i)ri\;iU? 
property  ;  and,  liiially,  tliat  there  is  no  reason 
why  the  other  trust  certificate  owners  should 
have  lost  their  confidence  in  the  former  trus- 
tees,—  we  may  feel  justified  in  assuming  an 
identity  of  the  trust  certificates  retransfcu  red, 
with  that  private  property  of  tlie  trustees.  (U' 
the  other  certificate  holders,  it  is  not  likely 
that  many  have  tell  an  inducement  lo  in;ike  (he 
change.  'rherel)\-  it  is  explained  why  the  Standard 
Oil  managers  did  not  see  the  necessity  of  re-estah- 
lishhig  a  new  large  company.      Hy  means  merely 


100  INDUSTRIAL   COMBINATIONS. 

of  their  proprietary  rights,  they  cohere  firmly 
enough;  they  look  upon  their  securities  as  perma- 
nent investments,  and  do  not  use  them  for  gambling 
purposes.  The  large  owners  now,  as  formerly, 
control  the  management  of  all  the  companies.  No 
changes  have  taken  place  in  the  general  admin- 
istration, nor  is  it  expected,  in  the  near  future, 
that  anything  like  one  centralized  institution 
will  be  re-established.  In  the  aforesaid  meeting 
of  September,  1893,  one  of  the  stockholders  put 
the  question  whether  in  future  the  individual 
companies  would  practically  compete  with  each 
other.  The  administration  maintained  a  diplo- 
matic silence :  that  was  to  be  left  to  the  future.^ 
The  stock  of  about  twenty  refining  and  trans- 
portation companies,  of  establishments  for  the 
manufacture  of  by-products  and  packing  mate- 
rials was  finally  held  ready  for  distribution.  If 
ever  serious  attempts  should  be  made  to  attack 
the  large  companies  by  legal  proceedings,  the 
Standard  Oil  institution  would  offer  the  least  pur- 
chase in   its  formal  organization.     The  advisers 


1  Before  the  expiration  of  the  voting;  power  of  the  trustees, 
and  before  the  formal  dissolution  of  the  trust,  a  number  of 
smaller  corporations  were  dissolved  or  amalgamated  with  larger 
ones.  (Proceedings  of  meeting  held  at  26  Broadway,  New 
York  City,  on  March  21,  1892.) 


CORPORATION   LAW.  101 

of  tlie  Standard  Oil  Company  seem  still  to  be 
as  superior  to  those  of  oth^r,  dom'panies,'  h's  they 
were  twelve  years  ago.  At  that  tiins  they 
avoided  the  introductian  bi"  -any  of  the  clauses 
into  the  original  deed,  which  later  on  the  Sucfar 
and  Cotton  Oil  Trust  introduced  as  an  improve- 
ment. It  Avas  this  very  improvement  Avhich 
enabled  the  attorney-general  to  point  out  the 
illegal  tendencies  of  the  combinations. ^ 

The  Sugar  Trust ^  would  have  l)een  able  to  take 
the  same  course  as  the  Standard  Oil  Trust,  because 
here,  too,  the  trustees  owned  a  controlling  interest. 
But  it  was  preferred  to  give  the  trust  an  imme- 
diate successor  in  the  American   Sugar   Rcliiiiug 

*  The  Standard  Oil  'I'rust  deed  did  not  contain  detailed  state- 
ments of  any  especial  purposes  of  the  trust,  except  such  as  are 
of  the  very  nature  of  every  common  law  trust.  'I'he  Sugar 
Trust  deed  added  a  number  of  details,  such  as :  to  promote 
economy  of  administration  ;  to  reduce  the  cost  of  retining,  thus 
enabling  the  price  of  sugar  to  be  kept  as  low  as  is  consistent 
with  reasonable  profit ;  to  give  to  each  refinery  the  benefits  of 
all  appliances  and  processes  known  to  the  others,  or  used  by 
others,  and  useful  to  improve  the  quality  and  diminish  the  cost 
of  refined  sugar  ;  to  furnish  protection  against  unlawful  com- 
binations of  labour  ;  to  protect  against  inducements  to  lower 
the  standard  of  refined  sugar  ;  and  to  generally  promote  the 
interest  of  the  parties  hereto  in  all  lawful  anil  suitable  ways. 
(U.  S.  House  lieports,  No.  3112,  Sugar  Trust,  p.  3.) 

^  Details  about  the  Sugar  Trust,  though  not  from  sources 
altogether  reliable,  in  "The  Sugar  Trust,"  'J\(riff  li<f<>nn,  Au- 
gust, 189-i. 


102  INDUSTRIAL   COMBINATIONS. 

Company.  The  uncertainty  of  the  American 
tariff  ■  policy  made  it'  very  desirable  to  tlie  trus- 
tees to  be-  in  -a.  position  to  rapidly  dispose  of 
their  property,  wheilever  a  change  in  the  tariff 
threatened  a  decrease  in  values.  In  such  a  case, 
the  stock  of  a  large  company  naturally  would  be 
more  marketable.^ 

The  following  is  the  outline  of  the  present 
organization  of  the  large  combinations  :  At  their 
head  we  find  a  president,  with  a  board  of  admin- 
istration and  a  staff  of  oflicers,  as  required  by 
the  respective    corporation   laws.      The  board  is 

1  Events  proved  their  course  to  have  been  the  right  one.  The 
tariff  debates  of  1894  at  one  time  caused  tlie  fear  of  an  aboli- 
tion of  all  sugar  duties.  This  abolition  would  have  considerably 
decreased  the  value  of  the  American  Sugar  Refining  Company's 
property.  At  the  time  of  the  last  general  meeting  in  January, 
1894,  it  was  found  that,  in  anticipation  of  these  events,  the 
principal  stockholders  in  the  board  had  already  rid  themselves 
of  a  large  part  of  their  holdings.  The  measures  adopted  by  the 
Standard  Oil  Trust  tend  of  course  in  a  direction  exactly  oppo- 
site to  that  intended  by  the  anti-trust  movement.  Public  hos- 
tility had  been  aroused  because  in  a  trust  there  was  no  one  who 
could  be  held  responsible  in  case  of  unlawful  operations.  More 
publicity  was  desired.  The  trust  seemed  to  yield  ;  the  anti- 
trust laws  required  dissolution,  and  so  it  dissolved.  But  in  fact 
this  was  nothing  but  a  complete  withdrawal  from  the  field  of 
publicity.  Nothing  shows  more  clearly  the  mistakes  of  the 
present  anti-trust  legislation.  Both  groups,  Standard  Oil  and 
Sugar,  Cotton  Oil,  etc.,  comply  with  the  letter  of  the  law  only 
to  more  safely  circumvent  its  intentions. 


CORPOKATION   LAW.  103 

usually  divided  into  two  chief  departments,  one 
of  which  takes  charge  of  the  financial,  the  other 
of  the  technical  side  of  the  undertaking.  They 
are  subdivided  ^  into  committees  on  salas,  on 
purchases,  on  the  technical  supervision  of  especial 
branches,  and  so  on.  The  individual  undertak- 
ings are  run  with  a  certain  degree  of  indepen- 
dence, which  occasionally  extends  to  their  very 
orgiinization.  In  general,  the  central  office  buys 
the  raw  material,  fixes  the  selling  price  of  the 
manufactured  goods,  and  apportions  larger  orders. 
The  branches  take  smaller  orders  directly,  and 
decide  upon  most  of  the  details  of  their  man- 
agement. .  Continuous  intercourse  is  kept  up 
with  the  central  office,  and  regular  reports  are 
filed.  For  example,  in  the  Whiskey  Trust  the 
branches  send  daily  statements  of  production, 
sales,  and  deliveries.  Most  of  the  organiza- 
tions encourage  a  spirit  of  independence  and  of 
rivalry  among  their  branches,  in  regard  to  im- 
proving and  cheapening  the  process   of   produc- 

1  The  board  of  the  United  States  Leather  Company,  for  ex- 
ample, consists  of  twenty-seven  members,  with  an  executive 
comniittee  of  nine.  Tlie  other  eighteen  preside  over  the  admin- 
istration of  the  individual  tanneries.  The  executive  committee 
is  divided  into  committees  on  finance,  on  purchase  of  green 
hides,  on  sales,  etc.  The  technical  processes  are  left  to  the 
individual  members. 


104  INDUSTRIAL   COMBINATIONS. 

tion.  The  reports  of  the  American  Cotton  Oil 
Company  ^  give  a  very  complete  inside  view  of  its 
organization.  The  company  has  fifteen  directors, 
eleven  of  whom  live  in  New  York,  two  in  New 
Jersey,  one  in  St.  Louis,  and  one  in  Atlanta, 
Georgia.  The  president  is  chosen  from  among 
the  members  of  the  board ;  not  so  the  vice- 
president,  the  secretary,  and  the  treasurer.  The 
administration  has  an  attorney  of  its  own.  The 
executive  offices  are  in  New  York  City ;  execu- 
tive ofticers  besides  those  just  mentioned  are  the 
chairman  of  the  Board,  and  the  three  members 
of  the  finance  committee  (recently  established). 
The  head  office  is  in  New  Jersey.  A  banking 
firm  serves  as  transfer  agent  and  registrar  of  de- 
benture bonds,  a  trust  company  as  registrar  of 
preferred  and  common  stock.  There  is  a  central 
accounting  department  with  a  comptroller,  an 
auditor,  and  a  statistician,  and  there  are  also 
departments  for  sales,  transportation,  insurance, 
and  advertising.  A  chemist  is  in  charge  of  a 
central  laboratory.  The  Holland  American  Cot- 
ton Oil  Company  has  been  opened  as  an  inde- 
pendent branch  with  a  Dutch  charter  a  year 
ago,  and  the  former  foreign  representative  of  the 

1  Reports  presented  to  the  stockholders  of  the  American  Cot- 
ton Oil  Company,  at  their  annual  meetings,  for  the  fiscal  years 
ending  August  31. 


CORPORATION    LAW.  105 

Cotton  Oil  Company  has  been  appointed  its 
president.  The  headquarters  of  the  foreign  re- 
presentative have,  in  consequence,  been  transferred 
from  Hamburg  to  Rotterdam.  Nine  state  com- 
l)anies,  operating  crushing  mills,  exist  in  Alabama, 
Arkansas,  Georgia,  Mississippi,  Texas,  North  Car- 
olina, South  Carolina,  Tennessee,  and  Louisiana; 
they  are  managed  by  vice-presidents.  Of  nine 
refineries,  two  are  situated  in  New  Jersey,  one 
in  Chicago,  one  in  St.  Louis,  one  in  Cincin- 
nati, one  in  Providence,  one  in  Memphis,  one  in 
Louisville,  and  one  in  Louisiana.  Two  of  them, 
the  Wilcox  Lard  and  Refining  Company  and 
the  N.  K.  Fairbank  Company,  are  in  tlicm- 
selves  establishments  of  a  world-wide  reputation. 
They  maintain  branches  devoted  to  a  further 
utilization  of  cotton  oil.  Tliey  have  their  own 
staff  of  officers,  sales  agents,  etc.  One  hundred 
and  twenty  manufacturing  properties  are  located 
in  sixteen  states.     They  are  divided  into  : 

Kuiiniiifr.    Doiiiianl.    DisrnantliMl.  Totnl. 

Crude  Oil  Mills 49  5             18  72 

llefineries 10  5  15 

Lard  and  Cottolene  Plants    .  4  4 

Soap  Factories 8  1  9 

Cotton  Ciiuneries 11  4  lii 

Cotton  Compressors ....  2  1  3 

Fertilizer  Mixing  KstaMishiiu'iits  2  2 

Total 120 


106  INDUSTRIAL   COMBINATIONS. 

The  company  owns  one  tank  steamer  of  4300 
tons  and  2300  horse  power,  355  tank  cars,  23  box 
cars,  and  one  barrel  car.  A  table  in  the  report 
for  1894 1  gives  a  comparison  between  the  cash 
value  of  the  property  and  the  good  will,  and 
shows  the  proportion,  borne  by  each,  to  the 
capital  stock.  From  45.2%  in  1891,  the  actual 
value  of  the  property  rose  to  48%  in  1892,  50% 
in  1893,  50.8%  of  the  capitalization  in  1894. 
From  this  we  may  conclude  that  at  the  time  of 
establishment  of  the  trust  and  even  up  to  its 
reorganization,  the  actual  value  of  the  under- 
taking, minus  the  good  will,  was  not  much  more 
than  from  one-fourth  to  one-fiftli  of  the  capital 
stock. 2  A  calculation  in  the  report  for  1893 
shows  that  the  actual  property  then  represented 
a  security  on  the  preferred  stock  equal  to  125% 
of  its  par  value  ;  the  common  stock  was  repre- 
sented by  the  25%  surplus  above  the  par  value 
of  the  preferred  stock,  all  other  increment  of 
property,  and  surplus  earnings  over  the  0% 
preferred  stock  dividends,  and  also  by  the  good 
will,  franchises,  leases,  contracts,  patents,  proc- 
esses, brands,  and  kindred  assets  of  the  business. 

1  p.  23. 

2  This  agrees  with  the  testimony  of  Mr.  John  Scott  before 
the  New  York  State  Committee  in  1888. 


CORPORATION   LAW.  107 

This  statement  is  important  for  the  understanding 
of  the  morphology  of  a  well-managed  giant  under- 
taking of  that  sort.^ 

The  rubber  combination  lias  adopted  a  peculiar 
organization.  For  a  number  of  years,  negotiations 
were  pending  which,  after  the  failure  of  several 
pools,  led,  in  1892,  to  a  preliminary  understanding. 
But  not  until  1893  was  strength  and  vitality 
infused  into  the  comljination,  when  the  head  of 
the  most  prominent  concern  in  the  rubber  manu- 
facture, which  at  that  time  joined  the  pool,  was 
elected  president  of  the  whole.  To-day  it  in- 
cludes all  rubber-shoe  companies  of  the  country, 
and  a  few  other  rubber-goods  factories.  The 
United  States  Rubber  Company  owns  only  its 
own  stock,  and  they  pretend  to  be  run  independ- 
ently. Practically  it  exercises  a  complete  and 
uniform  control  ;  it  buys  the  rubber  on  a  large 
scale  through  its  agents  in  the  South  American 
markets,  imports  it  in  shiploads,  and  furnishes 
it  to  the  individual  factories.  To  avoitl  even  the 
semblance   of   a  combine,  all    the   otlicers  of  the 

1  It  is  said  to  be  customary  for  tlie  preferred  stock  in  ail 
kinds  of  American  stock  companies  to  represent  the  money 
value  of  land,  plant,  materials,  products,  etc.,  whilst  the  com- 
mon stock  at  the  beginning  represents  good  will,  rights,  etc., 
to  which  by  and  by  accumulaled  i)n)lils  add  a  more  tangible 
basis. 


108  INDUSTRIAL  COMBINATIONS. 

several  companies  are  left  in  their  positions.  The 
sales  are  entrusted  to  a  company  in  New  York, 
while  the  financial  affairs  are  managed  by  a  third 
firm.  The  company  has  closed  several  of  the 
factories,  and  in  order  to  keep  the  remainder  in 
touch  with  each  other  Avithout  transgressing  the 
corporation  laws,  the  United  States  Riihher  Ad- 
vancers' Oluh  has  been  formed,  composed  of  the 
managers  of  the  various  factories.  They  began  by 
paying  a  joint  visit  to  each  establishment,  and  in- 
vestigating the  best  methods  of  production.  Since 
then  they  have  met  "  socially  from  time  to  time,  in 
an  informal  manner,  and  have  en  passant  discussed 
business  affairs."  Besides  the  savings  resulting 
from  the  wholesale  purchases  and  the  doing  away 
with  middlemen,  much  stress  is  laid  by  the  man- 
agers upon  the  technical  improvements  effected. 
On  account  of  the  short  time  of  the  combina- 
tion's existence,  it  is  not  yet  possible  to  form 
a  definite  judgment  of  its  working.  The  same 
may  be  said  about  the  United  States  Leather 
Company.  It  may  be  mentioned  that  these  two 
companies,  and  also  the  Diamond  ^Nlatch  Com- 
pany, the  American  Typefounders'  Compan}^  the 
American  Tobacco  Company,  the  new  United 
States  Cordage  Company,  and  a  few  others,  have 
never  been  trusts  in  the  strict  legal  sense,  but 
joint  stock  companies  from  the  beginning. 


COKPORATION   LAW.  109 

III.  Mr.  Cook  seems  to  be  right  in  regarding 
it  as  a  great  moral  victory  for  public  opinion,  that 
the  trusts  have  been  compelled  to  intrench  them- 
selves under  the  cover  of  corporate  charters.  ^ 
The  secrecy  of  the  trusts,  their  power  to  refuse 
information,  and  their  complete  lack  of  responsi- 
bility was  indeed  a  very  great  danger.  But  tlie 
most  important  legal  questions  still  remain  unset- 
tled. No  serious  investigator  of  this  question 
attributes  great  weight  to  the  anti-trust  statutes 
in  their  present  shape.  ]\Iore  may  perhaps  be 
expected  finally  from  the  decisions  of  the  courts. 
Legal  judgments  depend  upon  the  conception  of 
public  policy ;  and,  as  this  conception  is  subject 
to  change,  the  law-creating  action  of  the  courts 
is  likely  to  change  also.  That  this  is  possiljle, 
and  indeed  is  done  by  a  process  of  quiet  and 
natural  progress,  is  the  very  thing  that  consti- 
tutes the  strength  of  the  English  common  law. 
It  is  not  to  the  disadvantage  of  conservative 
development  that  the  decisions  of  the  judges 
are  occasionally  somewhat  behind  the  advanced 
demands  of  the  age.  It  has  been  well  remarked 
that  a  judge  who  lias  to  rciidci'  a  decision  on 
modern  problems  received  his  education  in  eco- 
nomics twenty-five  to  fifty  years  ago,  when  condi- 

^  W.  W.  Cook,  "Corporation  I'roblcin,"  j).  245. 


110  INDUSTRIAL   COMBINATIONS. 

tions  and  views  were  very  different.  Therefore 
he  is  very  likely  to  take  a  mistaken  attitude  towards 
a  recent  movement.  In  a  comparatively  short 
time,  however,  there  will  sit  on  the  benches  a 
race  of  judges  who  have  received  a  modern  eco- 
nomic training.  They  will  be  able  to  decide  such 
a  case  from  a  practical  standpoint  and  with  due 
consideration  for  time  and  place. 

The  most  important  recent  decisions  of  the 
United  States  courts  already  show  a  changed 
tenor.  1  They  declare  the  anti-trust  legislation  in 
its  present  shape  to  be  entirely  unserviceable. 
In  his  report  for  the  year  1893,^  the  attorney- 
general  of  the  United  States  expresses  his  views 
reo-ardinsf  the  Sherman  anti-trust  law.  He  con- 
siders  this  law  illegal.  Though  a  member  of  the 
Democratic  party,  he  apparently  does  not  expect 
very  much  from  any  sort  of  anti-trust  legislation  of 
the  present  form.^  He  thinks  that  an  exact  defi- 
nition of  the  pujiishable  acts  is  almost  impossible, 
and  that  what  is  said  about  monoj)olies  can  be 
applied  just  as  well  against  individual  business 


1  Dodd,  "  Present  Legal  Status  of  Trusts,"  p.  167-169. 

2  p.  26. 

3  As  the  former  attorney  of  the  Whiskey  Trust,  he  has,  of 
course,  had  the  opportunity  to  study  the  trust  question  from  a 
practical  standpoint. 


COKPOKATIOX   LAW.  Ill 

transactions.  He  quotes  for  his  support  the  con- 
clusions of  a  judge  in  the  United  States  Court  for 
the  Southern  District  of  Ohio,  recently  elected  an 
associate  justice  of  the  Supreme  Court :  "  (1)  that 
Congress  cannot  limit  the  right  of  state  corpora- 
tions or  of  citizens  in  the  acquisition,  accumula- 
tion, or  control  of  property ;  (2)  that  Congress 
cannot  prescribe  the  prices  at  which  such  property 
shall  be  sold  by  the  owner,  whether  a  corporation 
or  individual;  (3)  that  Congress  cannot  make 
criminal  the  intents  and  purposes  of  persons  in 
the  ac(|uisiti()n  and  control  of  property  which  tlie 
states  of  their  residence  or  creation  sanction  ;  (4) 
that  monopoly  as  prohibited  by  the  statute  means 
an  exclusive  right  in  one  party  coupled  with  a 
legal  restriction  or  restraint  iq^on  some  other 
party  which  prevents  the  latter  from  exercising 
or  enjoying  the  same  right ;  (5)  and  that  con- 
tracts in  restraint  of  trade  and  commerce  as  pro- 
]iil)iU'd  are  contracts  in  general  restraint  thereof, 
and  sucli  as  Avould  be  void  at  common  law,  inde- 
pendently of  any  statute." 

Tills  decision  must  be  accepted  and  acted  u[)()n 
as  a  precedent,  until  it  is  reversed  V)y  a  tril)u- 
nal  of  last  resort.  The  attorney-general  finally 
directs  attention  to  the  fact  that  an  attenq)t  lias 
been    made    to    treat   strikes    as    comiuir    within 


112  INDUSTRIAL   COMBINATIONS. 

the  provisions  of  this  law,  and  even  to  declare 
illegal  upon  this  ground  a  paragraph  ^  on  the 
statutes  of  the  Brotherhood  of  Locomotive  Engi- 
neers. In  other  words,  these  measures  of  restric- 
tion were  invoked  even  to  solve  the  great  problem 
of  capital  and  labour!  It  is  generally  believed 
that  the  final  decisions  of  the  Supreme  Court  will 
move  on  the  lines  of  the  attorney-general's  report. 


PUBLIC   OPINION   AND   COMBINATIONS.        113 


CHAPTER  VII. 

PUBLIC    OPINION   AND   THE   COMBINATIONS. 

I.    The  Theorists. 

There  are  many  who  disapprove  of  trusts  ami 
combinations  upon  general  anti-eentralislic  -md 
individualistic  reasons,  and  as  a  matter  of  prin- 
ciple. They  regard  the  trusts  as  hideous  and 
rapacious  monopolies,  which  annihilate  the  indi- 
vidual, and  by  heaping  up  wealth  stolen  from  the 
people,  and  by  their  entire  organization,  play  into 
the  hands  of  socialism. ^  "They  are  things  to  be 
feared.  They  antagonize  a  leading  and  most 
valuable  principle  of  industrial  life,  in  tht'ir 
attempt  to  curb  com[)etition  and  bring  it  under 
strict  control.  And  when  we  witness  the  heart- 
less manner  in  which  some  trusts  have  closed 
manufactories,  and  turned  nu-n  willing  to  be 
industrious  into  the  street,  in  order  that  they  ma}' 
increase  profits  already  I'casonabl}'  large,  we  can- 
not help  asking  ourselves  whether  the  tiust,  as 
we  see   it,  is   not  a  i)ublic   enemy,  whetliL'r    it   is 

'  Such  are  the  views  of  writers  like  Professor  lladleij.  See  his 
Speech  before  XIX.  Century  Club,  New  York,  December,  1894. 

I 


114  INDUSTRIAL  COJMBINATIONS. 

not  teaching  the  labourer  dangerous  lessons, 
whether  it  is  not  helping  to  breed  anarchy.  "^ 

These  views  are  upheld  by  a  number  of  the  older 
"Manchester  men";  their  arguments  are  most 
clearly  summed  up  in  the  statement  of  Gen.  Roger 
A.  Pryor  before  the  New  York  Senate  Committee.^ 

"1.  Competition  between  buyers  of  the  raw 
material  enhances  the  price  to  the  producer. 

"  2.  Competition  between  sellers  of  the  manu- 
factured article  reduces  its  price  to  the  consumer. 

"  3.  Reduction  of  price  multiplies  the  number 
of  consumers. 

"  4.  Increase  of  consumption  stimulates  produc- 
tion to  supply  the  increased  demand. 

"6.  Increase  of  production  implies  an  increase 
in  the  employment  of  labour. 

"6.  Competition  between  the  employers  of 
labour  enhances  the  wages  of  labour. 

"7.  EiUiancement  of  the  wages  of  labour  in- 
volves the  material  and  moral  amelioration  of  the 
condition  of  the  labouring  class. 

"  8.  Competition  to  sell  stimulates  to  improve- 
ments in  the  quality  of  the  article  offered. 

"9.  Competition  to  sell  urging  reduction  in 
the  cost  of  the  article,  ingenuity  is  quickened  to 

1  Judge  Cooley  in  Belforfs  Magazine,  June,  1888. 
a  "Trust  Combinations,"  p.  64. 


PUBLIC   OPINION   AND   COIMBINATIONS.       115 

the  invention  of  expense-saving  and  labour-saving 
machinery,  and  so  a  stimulus  is  applied  to  the 
progress  of  the  useful  arts  and  sciences. 

"  In  short,  competition  ministers  to  the  welfare 
of  all  classes  of  the  community,  and  augments 
the  resources  and  power  of  the  state.  But  the 
evil  of  excessive  competition  is  counteracted  and 
arrested  by  the  principle  of  self-interest  and  the 
operation  of  the  law  of  supply  and  demand.  On 
the  other  hand,  by  monopoly  all  these  salutary 
results  are  arrested  and  prevented. 

"  1.  There  being  but  a  single  buyer  of  the  same 
material,  he  dictates  to  the  producer  what  price 
he  pleases. 

"  2.  There  being  but  a  single  seller  of  the  fin- 
ished article,  he  extorts  from  the  consumer  an 
exorbitant  price. 

"3.  The  increased  price  to  the  consumer  dimin- 
ishes the  number  of  consumers  and  restricts 
consumption. 

"4.  Diminished  consumption  necessitates  di- 
minished production. 

"5.  Diminish(Hl  production  diminishes  the  em- 
ployment of  lab(jur. 

"6.  There  being  but  a  single  employer  of  la- 
bour, he  hires  it  at  his  own  reduced  })rice. 

"7.    Monopolizing  the  market,  and  assured  of  a 


116  INDUSTRIAL   COMBINATIONS. 

sale  in  any  event,  the  seller  has  no  motive  for 
improving  the  quality  of  the  article,  and  so  it 
necessarily  deteriorates. 

"8.  Monopolizing  the  market,  and  so  com- 
manding his  own  price,  and  assured  of  his  profit, 
the  manufacturer  has  no  motive  to  reduce  the  cost 
of  production  by  the  invention  of  labour-saving 
and  expense-saving  machinery. 

"9.  Monopolizing  the  production  and  the 
market,  and  so  commanding  what  profits  he 
pleases,  the  manufacturer  has  no  motive  to  in- 
crease production,  but,  on  the  contrary,  is  urged 
by  interest  to  save  the  expense  of,  to  him,  un- 
necessary production,  and  so  takes  factories  in  the 
combine  for  the  purpose  only  of  dismantling  and 
stopping  them. 

"  In  one  word,  monopoly  despoils  and  oppresses 
all  classes  of  the  community  and  debilitates  and 
impoverishes  the  state. 

"  But  the  political  effects  of  the  monopoly  are 
even  more  menacing  than  are  its  economic  results, 
—  as  is  illustrated  by  the  impressive  warning  of 
the  late  Judge  David  Davis.  Great  corporations 
and  consolidated  monopolies  are  fast  seizing  the 
avenues  of  power  that  lead  to  the  control  of  the 
government.  It  is  an  open  secret  that  they  rule 
states  through  procured  legislatures  and  corrupted 


PUBLIC   OPINION   AND   COMBINATIONS.        117 

courts,  that  they  are  strong  in  Congress,  and  that 
they  are  unscrupulous  in  the  use  of  means  to  con- 
quer prejudice  and  to  acquire  influence.  Tliis 
condition  of  things  is  truly  alarming,  for  unless 
it  be  changed  quickly  and  thoroughly,  free  institu- 
tions are  doomed  to  be  subverted  by  an  oligarchy 
resting  upon  a  basis  of  money  and  corporate  power." 
On  the  other  hand,  we  find  in  favour  of  com- 
binations most  of  the  younger  economists  of  the 
country  who  have  studied  the  question  thoroughly. 
Under  the  influence  of  historical  thought,  they 
feel  convinced  that  the  movement  is  an  unavoida- 
ble step  in  an  organic  development,  and  that  it 
finds  its  justification  in  the  tendencies  of  modern 
capitalism  and  its  technical  auxiliary,  —  the  large 
undertaking.  To  such  opinions  they  have  been 
led  by  the  observation  of  facts.  They  are  fully 
aware  that  in  the  modern  mechanism  of  trusts 
there  are  many  defects  and  faults,  and  these  they 
strongly  condemn.  But  they  think  that  all  these 
drawl )acks  are  not  inherent,  but  rather  tcm})0- 
rary.  According  as  they  are  influenced  by  their 
professional  position  or  their  conception  of  indus- 
trial society,  they  ask  either  ior  laissez /aire,  or  for 
legal  recognition  and  regulation.  The  fniiiier 
standpoint  is  taken  by  Mr.  Dodd.'  He  breaks 
1  "  Aggregated  Capital." 


118  INDUSTRIAL   COMBINATIONS. 

into  a  panegyric  on  the  progress  which  has  been 
derived  from  the  application  of  large  capital  and 
from  the  centralization  of  undertakings.  He 
shows  how  humanity,  by  means  of  organization 
and  combination,  is  led  from  "thatched  huts, 
without  chimneys  or  glass,"  from  a  state  where 
"naked  women  chanted  wild  measures,  while  the 
men  with  brandished  clubs  danced  a  war  dance," 
to  the  highest  blessings  of  civilization.  ^  He 
emphatically  declares  that  all  state  interference 
is  unlawful,  unnecessary,  and  hampering;  he 
tries  to  defeat  the  anti-trust  Aving  of  the  laissez- 
faire  party  on  their  own  ground,  by  urging  that 
the  play  of  natural  forces  and  the  endeavours  of 
individuals  in  furtherance  of  their  own  and  the 
common  interest  ought  to  be  left  unchecked. 
President  Andrews,  Professor  Jenks,  and  Mr. 
George  Gunton,  likewise,  all  approve  of  the  ten- 
dencies towards  organization,  which  they  believe 
to  be  necessary,  but  they  think  that  control,  and 
protection  against  the  frequent  abuses  of  combi- 
nations, are  badly  needed. ^  Mr.  Gunton  warns 
them  not  to  employ  unjust  methods,  which  cannot 

1  "Aggregated  Capital,"  p.  54. 

-  Andrews,  "  Trusts  according  to  Official  Investigation  "  ;  Gun- 
ton, "Economic  and  Social  Aspect  of  Trusts";  Idem.,  "The 
Economic  Errors  of  Trusts"  ;  Jenks,  "  Capitalistic  Monopolies." 


PUBLIC   OriNION   AND   COMBINATIONS.        119 

but  result  —  so  he  declares  —  in  their  annihila- 
tion. Their  only  justification  he  finds  in  their 
constant  efi'ort  towards  the  cheapening  and  im- 
proving of  products.  Professor  Jenks  admits  the 
great  importance  of  cheaper  prices;  he  finds,  how- 
ever, this  to  be  only  one  of  many  justifications  for 
the  rise  of  combinations  and  urges  that  the  mere 
fact  of  an  increase  in  prices  is  not  a  sufficient 
reason  for  denouncing  trusts  as  an  evil  per  se. 

The  radical  socialists,  especially  the  European 
immigrants  with  social-democratic  tendencies, 
favour  trusts,  in  so  far  as  they  appear  to  be  a 
progress  along  the  lines  of  their  Marxian  creed, 
and  a  step  in  the  direction  of  their  future  system 
of  production,  in  accordance  with  Alarx's  theories. 
The  large  capitals  concentrated  in  a  few  hands, 
the  masses  impoverished, — that  will  hasten  the 
nationalization  of  all  private  property.^  Against 
the  present  controllers  of  the  trust  these  men  of 
course  protest  most  decidedly. 

The  author  has  attempted  to  learn  the  opinions 
of  the  anai^iists  in  regard  to  trusts,^  but  he  lias 

1  Vide  rowderJi/,  "Trusts,"  p.  24. 

2  Besides  tlie  Russian-Polish  i  mini  grants  there  are  some 
native  Americans  wlio  from  tiieoretical  and  ideal  considerations 
have  been  led  into  tlu;  ranks  of  anarchism.  For  instance,  Mr. 
Ben.  1\.  Tucker,  in  liis  "  Instead  of  a  Book,  a  Frai^mentary  F,x- 
planatiou  of  Philosophic  Anarchism."     I  cannot  help  thinking 


120  INDUSTRIAL   COMBINATIONS. 

not  succeeded  in  understanding  them.  They 
declare  the  capitalistic  organization  of  produc- 
tion to  be  extremely  harmful,  as  well  as  all  capital 
and  all  organization.  But  what  they  desire  to 
put  in  its  place  they  are  unable  to  say. 

II.    The  Politicians. 

The  great  political  parties  differ  in  their  views 
about  the  usefulness  of  large  combinations,  accord- 
ing to  their  general  doctrines.  The  Democrats, 
who  are  anti-centralistic,  regard  them  as  a  great 
danger  to  the  institutions  of  the  country.  They 
refer  to  innumerable  cases  of  bribery,  of  undue 
influence  upon  the  courts  and  the  legislatures, 
which  are  directly  ascribable  to  the  trusts.  In 
this  point  some  of  their  adversaries  agree  with 
them;  but  Mr.  W.  W.  Cook,  who  is  himself  a 
Democrat,  believes  this  to  be  a  danger  which 
will  diminish  steadily  with  the  progress  and  de- 

that  these  men,  who  are  not  so  frenzied  as  the  Italian  and  French 
anarchists,  have  been  led  into  anarchism  simply  by  seeing  the 
enormous  corruption  of  the  administration  around  them.  They 
are  mostly  to  be  found  in  New  York  and  Illino^  It  does  not 
seem  inexplicable  that  men  who  have  never  seen  a  good  Euro- 
pean government,  and  are  too  near-sighted  to  conceive  of  one, 
but  have  for  a  long  time  witnessed  the  failures  of  attempted 
domestic  reforms,  arrive  at  the  conclusion  :  rather  no  govern- 
ment than  such  a  one  ! 

This,  of  course,  applies  only  to  a  small  minority  ;  the  major- 
ity can  hardly  be  credited  with  such  ideas  of  an  ethical  nature. 


PUBLIC   OPINION   AND   COMBINATIONS.        121 

velopment  of  legislation.  "They  are  not  seek- 
ing glory,  or  honour,  or  even  power  for  the 
sake  of  power  ;  they  are  seeking  property.  .  .  . 
They  are  in  politics  for  business  only.  ...  If 
government  could  afford  to  have  nothing  to  do 
with  their  property,  they  would  have  nothing 
to  do  Avith  government.  .  .  .  Government  is 
seeking  to  rule  the  corporations,  and  the  cor- 
porations are  seeking  to  control  the  govern- 
ment. .  .  .  This  source  of  political  corruption, 
however,  will  decrease,  as  time  goes  on.  The 
points  of  controversy  between  the  corporations 
and  government  will  grow  less  and  less,  and, 
as  these  disputes  diminish  in  number  and  in- 
tensity, so  also  will  diminish  the  motives  and 
reasons  of  the  corporations  for  interfering  with 
government."  ^ 

The  Republicans  are  more  in  favour  of  combi- 
nation from  the  very  nature  of  their  principles. 
They  strive  for  organization  and  centralization 
where  the  individual  has  proved  insufficient. 
Wherever  combinations  employ  illegal  methods, 
as  the  trusts  frequently  have  done,  they  are  will- 
ing to  restrict  them.  Otherwise  they  regard 
them  as  a  natural  outgrowth  of  modern  ecoiioiuii- 

^  Cook,  "Corporation  I'roblem,"  p.  247. 


122  INDUSTRIAL   COMBINATIONS. 

life.^  But  public  prejudice  made  it  appear  wise 
to  them  not  to  confess  too  openly  their  feelings, 
and  the  platforms  of  1894  contain,  as  well  on  the 
Republican  as  on  the  Democratic  side,  strong 
denunciation  of  trusts. 

The  Populists  detest  every  sort  of  capitalistic 
organization.  They  deemed  it  fit,  however,  in  the 
Texas  anti-trust  law,  whilst  forbidding  combina- 
tions in  manufactured  goods,  to  exempt  the  agri- 
cultural products  in  the  hands  of  the  farmers  from 
this  restriction.  So  far  as  they  appreciate  the  un- 
avoidable character  of  the  movement,  they  ask  for 
state  control  or  ownership  of  the  monopolies.^ 

To  thoughtful  men  of  whatever  party,  the  rise 
of  a  plutocracy,  in  consequence  of  the  greater 
ease  with  which  wealth  can  now  be  accumulated 
appears  to  be  a  source  of  weighty  objection  from 
the  standpoint  of  economic  policy.^  This  is  one 
of  the  largest  questions  forced  to  the  front  by  the 

1  Opening  address  of  the  Republican  Congressional  campaign 
in  Boston  by  George  0.  Shattuck,  October  2,  1894. 

2  H.  D.  Lloyd,  "  Wealth  against  Commonwealth,"  Chapter 
XXXV. 

3  Economists  like  Professor  Sumner  do  not  consider  this  to 
be  dangerous  at  all.  He  expresses  his  astonishment,  in  the 
Fortim,  1894,  at  the  fact  that  a  man  can  hold  a  professorship 
of  economics  in  a  leading  German  university  who  points  out  in 
his  lectures  that  the  increasing  inequality  in  the  distribution  of 
wealth  may  prove  a  great  danger  in  social  politics. 


PUBLIC    OPINION   AND   COMBINATIONS.        123 

modern  economic  system,  and  it  covers  a  much 
wider  field  than  our  problem.  Some  like  Mr. 
Cook,^  who  are  well  aware  of  the  danger,  regard 
the  corporate  investment  of  wealth  as  likely  to 
avert  it.  "  Corporations  are  created  by  the  state  ; 
as  soon  as  they  abuse  their  privileges,  the  people 
can  restrict  or  anniliilate  them.  The  plutocrat 
gives  bonds  to  keep  the  peace  when  he  acts 
through  the  corporation." 

Mr.  Dodd,  also,  remarks  that  the  middle  chasses, 
and  even  the  workingmen,  are  enabled  to  partici- 
pate in  the  largest  combinations  by  acquisition  of 
their  stock,  and  he  tries  to  show  by  statistics  that 
this  very  often  occurs.  The  figures  published  by 
the  Sugar,  Cotton  Oil,  and  some  other  companies 
seem  to  justify  this  view  to  a  certain  extent. ^ 

During  the  past  few  years  the  subject  of  trusts 
and  monopolies  has  begun  to  play  an  important 
role  in  political  campaigns.  It  was  one  of  the 
factors  which,  together  with  the  silver  question 
and  the  tarifl',  brought  the  Democrats  in  1892  back 

^  Cook,  "Corporation  Problem,"  p.  270. 

2  To  ascertain  wliether  the  increase  of  stockholders  is  not 
largely  due  to  a  more  general  distribution  of  the  individual 
securities  among  a  relatively  very  small  group  of  capitalists 
who  grachially  diversify  their  investments,  would  require  a  very 
minute  comparison  of  the  lists  of  stockholders  in  the  various 
comi^auies. 


124  INDUSTRIAL   COMBINATIONS. 

* 

into  power.  1  There  is  no  doubt  that  in  the  near 
future,  the  trust  question  will  prove  a  still  more 
important  issue. 

In  the  last  two  or  three  campaigns  the  matter 
has  come  to  the  front,  not  so  much  directly,  as 
in  its  connection  Avith  free  trade  and  protection. 
The  free  traders  have  skilfully,  and  with  a  good 
understanding  of  their  effectiveness,  directed  vio- 
lent attacks  against  protection  and  trusts  together. ^ 
Their  arguments  are,  that  the  tariff  favours  the 
trusts,  that  the  latter  impoverish  the  people  by 
raising  domestic  prices,  whilst  selling  more  cheaply 
to  foreign  countries,  that  they  depress  wages,  and 
even  dismiss  workingmen,  and  force  them  to  be- 
come tramps.  Instead  of  increasing  production, 
as  was  intended  by  the  tariff,  of  opening  new  es- 
tablishments, and  employing  more  hands,  the  trusts 
are  alleged  to  have  limited  and  restricted  industrial 
progress.  Some  Republicans,  such  as  Senator 
Sherman,  have  therefore  declared  their  willingness 
to  abolish  the  protective  tariff  in  industries  con- 
trolled by  trusts.     During  the  recent  tariff  debates 


1  Vide  D.  A.  Wells,  "Trusts  and  Monopolies." 

2  See  the  pamphlets  of  the  New  York  Reform  Club :  "  The 
Trusts    and    the   Tariffs "  ;    "  Labour,    Wages,   and   Tariff ' '  ; 
"  Tramps,  Trusts,  and  Tariff  "  ;  "  Tariff  Trusts  plead  guilty  " 
"Labour,  Wages,  and  Trusts"  ;  "  Trusts  vs.  Wages." 


PUBLIC    OPINION   AND   COMBINATIONS.        125 

of  Congress,  the  House  of  Representatives  voted 
for  free  coal,  sugar,  and  iron,  chiefly  because  of 
the  combines  therein,  but  the  combinations  se- 
cured the  services  of  the  Senate,  and  defeated  this 
attempt.^ 

The  free  traders  think  that,  once  the  duties  are 
abolished  and  the  extra  profits  thence  accruing  are 
removed  (profits  which  in  the  Sugar  Trust  recently 
amounted  to  $20,000,000  a  year^),  trusts  will  no 
longer  pay,  and  so  will  collapse. 

HI.     The  Jurists. 

Their  opinions  have  already  been  touched  upon 
in  former  chapters.  Some  of  them  have  remained 
strictly  on  tlie  basis  of  the  old  English  law,  and, 

1  The  proceedings  in  the  Senate,  especially  those  in  connec- 
tion with  tlie  sugar  schedule,  make  it  worth  while  to  remember 
Cook\s  words  :  "  They  have  controlled  nominating  conventions, 
carried  elections,  dictated  appointments,  tampered  with  alder- 
men and  municipal  authorities,  bribed  judges,  legislators,  and 
otlier  public  officers,  and  made  their  influence  felt  in  Congress 
and  in  every  branch  of  the  national  government.  .  .  .  Politics 
and  bribery  are  to  them  a  matter  of  business."  —  "  Corporation 
Problem,"  p.  246.  But  Professor  Jenks  is  right  when/he  calls 
events  of  that  sort  political  plienomena,  wiiich  originate  tttit 
from  the  character  of  the  trusts,  but  from  the  character  of 
prevailing  political  moralitj-. 

'^  Vide  "The  Sugar  Trust"  in  Tariff  lii'form,  August,  1S04. 
Twelve  to  thirteen  millions,  according  to  Mr.  Ilavemeyer's 
testimony  before  the  Stock  Gambling  Investigation  Committee, 
p.  324. 


126  INDUSTRIAL  COMBINATIONS. 

according  to  their  views,  that  maxim  is  still  valid 
which  two  hundred  and  fifty  years  ago  declared 
the  trusts  "  very  dangerous  and  obnoxious  to  divers 
arts  and  artisans."  Formerly  this  was  Cook's 
standpoint,  and  to-day  it  is  that  of  Spelling.  But 
the  body  of  lawyers  friendly  to  combines  has  of 
late  grown  both  in  number  and  weight.  Promi- 
nent among  its  leaders  are  to  be  mentioned  the 
late  Professor  Dwight,  Austin  Abbott,  and  Ch.  F. 
Beach,  Jr.^ 

Undeniably  the  decisions  of  the  courts  have 
been  influenced  by  considerations  of  a  merely 
political  nature,  — which  may  be  attributed  to  the 
practice  in  many  states  of  electing '  judges  and 
public  attorneys  by  popular  vote  and  only  for  a 
limited  period. 

IV.  Among  business  men  the  trust  has  met 
with  many  enemies  who  felt  themselves  put  at  a 
disadvantage  by  its  existence.  They  noticed  with 
sorrow  how  they  were  being  deprived  of  their  busi- 
ness, and  exposed  pitilessly  to  the  arbitrariness  of 
the  magnates.  Seeing  their  bread  vanish,  they 
cried  out  that  the  whole  country  was  going  to 
starve.  Numberless  are  their  complaints,  con- 
tained in  the  reports  of  the  various  investigations, 

1  Th.  W.  Dwight,  "Legality  of  Trusts";  Austin  Abbott, 
"Condition  of  the  Law  as  to  Combinations." 


PUBLIC    OPINION   AND   COMBINATIONS.        127 

in  law-suits,  and  in  newspaper  articles,  and  many 
of  them  seem  well  justified  by  the  methods  whicli 
the  trusts  have  employed,  and  by  their  secret 
agreements  with  railroads  and  individuals.^  Yet 
it  must  be  remembered,  as  Jenks  says,^  that  under 
a  system  of  the  freest  competition,  many  of  the 
businesses  would  have  been  destroyed  which  have 
come  to  grief  from  the  action  of  the  trusts. 

The  public  has  complained  about  some  sudden 
rises  of  price.  The  Sugar  Trust  was  once  accused 
of  liaving  kept  back  from  the  market  the  due 
supply,  in  order  to  advance  prices  artificially;  but 
it  urged  as  its  defence  poor  crops  and  the  non- 
arrival  of  raw  materials.  The  Whiske}^  combine 
has  doubtlessly  disjjlayed  a  great  deal  of  arbitra- 
riness. Complaints  have  been  made  about  the 
deterioration  of  the  trust-made  products;  for  in- 
stance, recently  against  the  Standard  Oil  combine. 
The  latter  answers  that  this  is  only  temporary, 
and  due  to  llie  introduction  of  tlu^  new  Ohio  oil, 
which  is  much  more  impure,  and  cannot  at  once 
be  refined  to  the  highest  degree.  Generally  tlio 
trusts  claim  to  have  raised  steadily  the  standard 
of  quality,  whilst  it  is  well  known  that  foinierly 

'  //.  T).  Llnijil,  "  Woallli  a,i,^ainst  Coinmouwealtli,"  Chapters 
II.,  IV.',  VIII.,  IX.,  XII.,  ptc. 

2  "Capitalistic  Monopolies,"  p.  500. 


128  INDUSTRIAL   COMBINATIONS. 

an  exaggerated  competition  served  as  an  induce- 
ment for  adulteration.  Flour  was  mixed  with  the 
sugar;  leaves  of  a  poorer  quality,  and  even  of 
other  plants,  with  good  tobacco ;  fusel  oil  and 
water  with  alcohol  ;  cotton  oil  with  mixed  lard 
products ;   and  lime  with  starch,   etc. 

The  Whiskey  Trust  for  a  good  while  has  put 
out  more  than  75%  of  the  total  alcohol  produced 
by  the  country.  Eighty-five  per  cent  of  this  is 
compounded  by  the  admixture  of  fusel  oil,  chem- 
icals, liquors,  fruit  juices,  water,  and  sugar  into 
all  sorts  of  spirits  —  whiskey,  cordials,  and  every 
kind  of  wine  —  by  specially  licensed  rectifiers. 
These  compounded  goods  are  sold  everywhere 
under  the  pretence  of  being  original  products; 
but  the  Distilling  and  Cattle  Feeding  Company 
denies  any  connection  with  these  practices,  which 
had  been  common  before  its  establishment  and 
were  legally  authorized  by  "  compounders'  and 
rectifiers'  licenses."^ 

All  other  attacks  the  trusts  try  to  meet  with 
explanations,  or,  if  this  is  not  possible,  with  com- 
plete silence.  On  the  other  hand,  they  boast  of 
their  technical  achievements,  the  introduction  of 
better    and    cheaper  methods   of    production,   the 

1  Whiskey  Trust  Investigation  of  1892,  specially  pp.  iii- 
iv,  1-7,  67-74,  82-6,  87-90. 


PUBLIC   OPINION   AND   COMBINATIONS.        129 

lower  prices,  improved  quality,  and  safer  condi- 
tion of  the  undertaking.  They  declare  that  they 
are  able  to  ward  off  crises,  and  to  guarantee 
the  steadiness  of  trade.  They  show  how  they 
have  furthered  the  export  trade  of  the  country. 
They  demand  credit  for  having  at  certain  periods 
exported  at  a  rate  cheaper  than  they  asked  at 
home ;  though  this  has  not  everywhere  been  a 
characteristic  of  such  organizations,  since  while 
Standard  Oil  and  Cotton  Oil  have  done  a  good 
deal  in  this  line,  on  the  contrary,  the  establishment 
of  the  trust  has  just  stopped  such  practices  in 
tlie  whiskey  trade.  But  if  there  s1h)u1(1  occur 
a  decrease  in  consumption  in  the  country,  they 
would  be  enabled  by  this  method  to  continue  pro- 
duction, and  thus  to  avoid  a  depreciation  of  their 
plants  and  a  dismissal  of  their  workingmen. 

One  of  the  arguments  which,  economically,  is  of 
great  interest,  the  saving  of  national  wealth  by 
means  of  regulated  and  steadily  improved  produc- 
tion and  the  advantage  wliich  thereby  accrues  to 
t!ie  community,  the  author  has,  to  his  surprise, 
found   nowhere   definitely  expressed.^      Economy 

1  Vide  Losch,  "Nationale  Prochiktion  und  Xationale  Pro- 
duktioiisgliederuiig."  He  tries  to  figure  out  liow  nuicli  saving 
could  be  effected  by  the  application  of  centralized  processes  of 
production  on  a  large  scale. 


130  INDUSTRIAL   COMBINATIONS. 

in  the  use  of  raw  material  has  not  yet  become  a 
fundamental  maxim  in  this  country,  where  one 
meets  throughout  with  an  enormous  waste  of  the 
natural  wealth.  Jenks  makes  some  suggestion  in 
this  direction  and  acknowledges  its  fundamental 
bearings.  He  shows  the  enormous  cost  of  adver- 
tising e.g.  in  the  tobacco  industry,  of  gifts  in  the 
grocery  business,  of  travelling  salesmen,  etc.^ 

V.    The  Workingmen. 

The  trusts  claim  to  have  much  improved  the 
condition  of  their  workingmen  by  reducing  hours 
of  work,  increasing  wages,  and  securing  steady 
employment.  Their  opponents  allege  that  the  first 
step  of  the  trust  has  always  been  to  dismiss  many 
labourers,  and  then,  in  consequence  of  the  in- 
creased number  of  tlie  reserve  army  of  working- 
men  and  their  competition  for  work,  to  extend  the 
hours  of  labour,  or  to  reduce  the  wages  together 
with  the  hours  of  labour.  Of  this  the  Demo- 
cratic tariff  reformers  have  endeavoured  to  gather 
as  many  instances  as  possible. ^  We  have,  indeed, 
seen  that  at  the  beginning  numerous  workingmen 
were  discharged ;  but  the  information  given  by 
the  workingmen  themselves  seems  to  prove  that 
generally  a  reduction  of  the  hours  of  work,  seldom 

1  "Capitalistic  Monopolies,"  pp.  488-90. 
^Holt,  "Trusts  vs.  Wages." 


PUBLIC    OPINION    AND   COMBINATIONS.        131 

a  reduction  of  wages,  and  occasionally  an  increase, 
have  taken  place,  especially  where  the  working- 
men  were  well  organized  themselves.  This  they 
are  in  the  railroad,  petroleum,  iron,  and  sugar 
industries.  In  other  industries  subject  to  trusts 
the  organization  of  workmen  has  as  yet  gone  but 
a  little  way.i  It  is  pretty  clear  that  the  labourers 
in  centralized  undertakings  have  not  been  worse 
off  than  in  decentralized  ones. 

Mr.  Gompers,  ex-president  of  the  American 
Federation  of  Labour,  believes  that  the  combina- 
tions of  i)roducers  are  necessary,  and  that  their 
consequences  are,  at  least,  not  harmful.  He 
realizes  the  blessings  of  a  more  stable  condition 
of  things.  The  grand-masterworkman  of  the 
Knights  of  Labour  is  not  in  favour  of  trusts  ; 
he^s  in  favour  of  the  nationalization  of  the  grreat 
enterprises  like  coal-mining,  oil-refining,  railroads, 
gas  works,  etc.  The  heaping  up  of  vast  capitals 
seems  to  hiin  to  be  to  the  disadvantage  of  the 
workingmen.  Dodd,  on  the  other  hand,  thinks 
that  much  more  can  be  done  in  the  interests  of 
the  workingmen  when  capital  is  united  in  tlie 
hands  of  experienced  men.      How  little,  he  says, 

1  In  the  cotton  oil  iiidustiv  tlio  majority  of  tlic  \vorkiii£jmen 
are  ncj^roes  ;  in  the  eij^avette,  niatcli,  and  biscuit  factories  women 
are  generally  employed. 


132  INDUSTRIAL   COMBINATIONS. 

would  the  prosperity  of  the  Avorkingmeii  be  in- 
creased by  those  fortunes  which  to-day,  in  the 
hands  of  a  Vanderbilt,  a  Stanford,  a  Rockefeller, 
or  a  Carnegie,  have  liberally  established  univer- 
sities, museums,  institutions  of  art  and  charity, 
and  which  have  again  and  again  opened  new 
fields  to  productive  labour. 

The  men  in  control  of  the  trusts  have  over 
and  over  declared  that  they  were  fully  conscious 
of  their  duties  toward  their  workingmen.  Being 
almost  the  only  employers  within  their  branches, 
they  were  in  a  position  different  from  that  of 
an  individual  employer  surrounded  by  competi- 
tors. Furthermore,  —  and  that  is  really  the  key- 
stone, —  nothing  would  be  more  suicidal  in  their 
figlit  against  public  opinion,  than  to  be  con- 
victed of  an  unjust  pressure  on  their  working- 
men.  There  is  hardly  any  doubt  that  in  view 
of  the  importance  to  the  political  parties  of  the 
votes  of  the  workingmen,  the  legislatures  would 
proceed  very  draconically  against  the  oppressors 
of  labour.  The  workingmen  do  not  as  yet  form 
a  political  party  of  their  own ;  they  are  Demo- 
crats, Republicans,  or  Populists  ;  they  are  divided 
on  the  tariff  and  most  of  the  other  questions  ;  and 
they  have  not  yet  taken  a  uniform  position  in 
regard  to  the   trust   question.     In   the  crisis  of 


PUBLIC    OPINION   AND    COMBINATIONS.        133 

1893  the  workingmen  in  industries  organized 
under  trusts  and  the  like  seem  to  have  suffered 
less  than  in  unorganized  ones,  as  is  shown  in  the 
dijft'erence  between  the  anthracite  and  bituminous 
coal  regions. 

VI.    The  Trusts  and  the  Exchanges. 

On  the  exchanges,  principally  on  those  of  New 
York,  all  the  financial  interests  of  the  large 
undertakings  are  concentrated.  Natui-ally  the 
great  combinations  exercise  a  considerable  influ- 
ence there.  Though  in  part  not  officially  recog- 
nized, they  were  all  admitted  by  the  backstairs 
of  a  quotation  among  the  unlisted  securities.  In 
the  beginning  the  stock  exchanges  probably 
wanted  to  avoid  the  odium  and  the  responsibility 
that  might  be  attached  to  the  official  admission  of 
securities  which  were  but  too  often  of  a  rather 
(lul)i()us  character.  But  they  were  neither  will- 
ing nor  able  to  forego  the  vast  profits  accruing 
fioiii  transactions  with  these  corporations.  Trust 
l»a[)ers,  soon  aftei"  their  introduction,  gainc(l  tlie 
leadership)  in  the  speculative  stock  market  ;  eco- 
nomically expressed,  tliey  became  the  medium 
])y  which  demand  and  supply  are  usually  made  to 
balance  one  another  in  the  mont-y  niai'ket. 

In  regard  to  the  trust  question,  the  members  of 
the  exchanges  are  divided  into  two  parties.     To 


134  INDUSTRIAL   COMBINATIONS. 

the  one  it  seems  desirable  to  deal  with  large  units 
and  concerns,  where  there  is  an  opportunity  for  a 
uniform  supervision  of  the  entire  business.  They 
have  more  confidence  in  them ;  and  furthermore 
the  power  derived  from  a  connection  with  such 
an  undertaking  is  one  of  the  mainstays  of  their 
position.  These  are  the  magnates  of  the  ex- 
changes. The  medium-sized  or  smaller  brokerage 
and  banking  concerns,  which  formerly  did  busi- 
ness for  the  smaller  undertakings,  of  course  find 
themselves  nearly  excluded  from  the  transactions 
with  the  giants.  Only  as  second-hand  represen- 
tatives, or  surreptitiously,  when  the  leaders  do 
not  want  to  act  personally,  are  they  employed. 
Therefore  they  are  opposed  to  the  new  concerns. 
Moreover,  the  expectation  that  the  trusts  would 
provide  the  smaller  capitalists  with  a  very  remu- 
nerative and  safe  kind  of  investment,  has,  so  far, 
not  been  realized  at  all.^ 

It  is  a  thorn  in  the  side  of  some  great  financiers 
that  the  trusts  are  enabled,  by  their  centralized 
power,  to  obtain  more  favourable  terms  of  credit, 
and  that  thus  their  opportunity  for  individual 
gain  is  lessened.  They  do  not  like  transactions 
involving  great  risks,  and  they  see  that  tlie  risk 

1  Jeuks,  "  Capitalistic  Monopolies." 


PUBLIC  OPINION  andco:mbinations.     135 

is  greatly  increased  in  dealings  with  the  trusts. 
They  think  the  whole  stock-exchange,  that  busi- 
ness life  itself,  is  threatened.  They  admonish  the 
public  to  take  warning  by  the  disasters  in  the 
administration  of  the  cotton  oil  and  cordage  com> 
bines,  where  it  is  clearly  shown  what  may  happen 
in  other  cases.  How  terrible  have  been  the  panics 
resulting  from  the  collapse  of  the  Cordage  Trust, 
from  the  failure  of  the  large  railway  systems ! 
It  was  just  the  uncertainty  of  the  original  trust 
and  its  secret  methods  which  aroused  the  oppo- 
sition of  almost  all  parties.  The  spirit  of  uncer- 
tainty originating  from  it,  was,  in  consequence  of 
the  well-known  nervousness  of  the  exchanges,  dis- 
seminated throughout  the  whole  business  world. 

The  organizers  of  some  trusts,  as  we  have  seen, 
had  no  other  purpose  than  the  creation  of  a 
marketable  paper,  of  an  enlarged  opportunity  for 
speculation,  of  which  they  abundantly  availed 
themselves.  Manipulating  now  on  the  bull  and 
noAv  on  the  bear  side,  their  influence  was  decidcilly 
demoi-alizing.  They  invited  tlie  disaster  which 
befell  the  undertakings.  Therefore  the  adminis- 
trators of  many  of  the  bankrupt  railway  systems 
and  combinations  liavc  by  many  been  declared 
largely  responsil)lo  for  the  recent  crisis. 

The    well-managed    combinations   have   passed 


136  INDUSTRIAL   COMBINATIONS. 

through  the  hard  times  much  better  than  they 
were  expected  to  do,  princij)ally  those  which  were 
phiced  upon  a  sound  financial  basis,  i.e.  not  bur- 
dened with  a  great  funded  indebtedness  of  bonds 
or  mortgages,  and  not  in  need  of  extensive  credit. 
Wherever  vast  current  expenses  had  to  be  met, 
and  for  that  purpose  recourse  to  extensive  credits 
was  necessary,  —  as  in  the  Distilling  and  Cattle 
Feeding  Company  to  carry  their  large  stock  and 
pay  the  accumulated  rebates,^ —  there  have  been 
moments  of  great  anxiety.  Only  those  giant 
undertakings  whose  financial  power  was  indepen- 
dent of  outside  help  have  proved  reliable  in 
hard  times.  The  endeavour  of  the  combinations 
is  as  a  rule  to  give  and  employ  as  little  credit  as 
possible.  Wherever  they  must  avail  themselves 
of  it,  as  in  the  importation  of  raw  materials,  they 
enter  into  vast  transactions  with  first-class  finan- 
ciers at  New  York  or  London.  It  is  the  avowed 
purpose   of   the   trusts    to   restrict   and    regulate 

i  Again  the  Distilling  and  Cattle  Feeding  Company  has  to 
pass  through  a  great  internal  crisis.  It  is  impossible  for  the 
outsider  to  get  a  clear  idea  about  these  endless  proceedings  in 
the  courts,  inimours  about  bankruptcy,  plans  of  reorganization, 
action  taken  by  groups  of  stockholders,  etc.  Certainly  the 
business  methods  around  this  concern  cannot  do  very  much 
to  strengthen  the  arguments  of  the  advocates  of  centralization 
or  to  refute  the  enemies  of  gambling  on  the  exchanges. 


PUBLIC    OPINION   AND   COMBINATIONS.        137 

the  credit  granted  to  their  customers,  and  to 
deal  as  much  as  possible  on  a  cash  basis. 

One  of  the  most  striking  features  of  tlie 
American  stock  markets  in  connection  with  this 
problem  are  the  reorganization  committees.  It  is 
generally  known  what  is  their  purpose.  Besides 
those  who  are  largely  interested  in  the  bankrupt 
undertaking  either  for  themselves  or  as  repre- 
sentatives, there  are  many  who  only  try,  in  one 
way  or  the  other,  to  make  money  out  of  the  job. 
Tlie  numberless  reorganization  committees  within 
tlic  last  years,  and  the  way  in  Avhieh  they  have 
settled  affairs,  have  not  always  been  samples  of 
sound  business  policy.  Under  the  present  con- 
ditions all  depends  upon  the  quality  and  the 
standing  of  the  men  of  whom  they  are  composed, 
what  interests  are  represented  in  them,  and  what 
intentions  work  beneath  the  surface.  The  ex- 
changes and  the  public  seem  rather  tired  of  this 
system.  It  has  sometimes  proved  satisfactory, 
very  often,  not.  It  is  alleged  tliat  comjjanies 
have  occasionally  been  wrecked  in  order  to  give 
a  chance  to  the  spoliation  of  "  reorganize rs."' 

The  cotton  oil  •  mid  cordage^  reorganization  com- 
mittees needed   luonlbs  to  clean   onl    the   Angcan 

1  Appendix  XI.  ^  Appeinlix  XIV. 


138  INDUSTRIAL   COMBINATIONS, 

stables  of  the  old  administrations.  Payment  of 
new  assessments  on  the  stock,  reduction  of  the 
fixed  liabilities  as  well  as  of  the  original  capital, 
and  the  issue  of  new  preferred  securities,  were  the 
principal  elements  of  the  final  settlement.  The 
administration  was  changed,  and  better  financial 
advisers  taken  into  the  board  of  directors.  Ap- 
parently the  majority  of  the  existing  combinations 
had  to  pass  through  disasters  and  reconstructions, 
though  of  a  less  radical  character,  before  they 
settled  on  firm  ground.^ 

1  It  may  finally  be  said  that  it  is  not  very  advisable  to  refer 
to  the  newspapers  as  representatives  of  public  opinion  as  to 
trusts.  As  far  as  they  are  not  in  the  pay  of  the  one  or  the 
other,  the  papers,  for  the  sake  of  cheap  popularity,  are  almost 
unanimous  in  condemning  them,  without  any  attempt  to  do 
justice  to  the  real  situation.  They  know  that  nothing  is  more 
interesting  than  attacks  upon  "the  robbers  of  the  people,"  and 
for  that  purpose  they  collect  all  kinds  of  statements  with  no 
sort  of  critical  selection.  The  author  has  hardly  seen  one  good 
and  reliable  newspaper  article  on  trusts. 


CONCLUSIONS.  139 


CHAPTER   VIII. 

CONCLUSIONS. 

The  course  of  the  foregoing  investigation  has 
sliown  that  our  subject  has  an  importance  far 
beyond  its  temporary  and  local  aspect.  Through- 
out it  is  linked  to  all  the  momentous  problems 
of  oui-  time,  — •  indeed  to  the  problem  of  the  whole 
future  organization  of  our  economic  life.  Large 
undertaking  versus  small  workshop,  centralization 
and  regulation  versus  individualism,  the  distribu- 
tion of  wealth  among  the  masses,  and,  finally,  the 
relation  of  all  this  to  the  form  of  government,- — 
such  are  the  questions  tliat  are  involved. 

An  attempt  at  present  to  prophesy  whither  the 
movement  will  lead  can  only  be  guess-work;  for 
not  only  do  opinions  differ,  but  also  the  facts. 
In  every  direction  we  witness  the  collapse  of 
fresh  attempts.  Numberless  combinations  come 
into  existence  and  break  down,  come  once  more 
and  go  again,  and  innumeral)le  arc  the  reasons 
upon  which  all  these  movements  depend.  Now 
great  business  geniuses  succeed  in  uniting  large 


140  INDUSTRIAL   COMBINATIONS. 

branches;  then,  after  they  have  disappeared,  some- 
times their  creations  disappear  also  ;  whilst,  in 
other  cases,  these  survive  in  consequence  of  their 
centripetal  gravity,  grouped  around  capital  and 
property  and  sustained  by  improved  technical 
efficiency. 

What  changes  will  the  near  future  bring  in 
the  economic  life  of  the  country,  and  in  the 
organization  of  enterprises  ?  We  hear  about  the 
newly  discovered  iron  regions  of  the  Mesaba 
range.  A  great  concern  has  been  established  for 
their  exploitation.  The  iron  ore  penetrates  to 
the  surface,  in  apparently  inexhaustible  quantities 
and  the  greatest  possible  purity.  No  mining  is 
necessary  ;  it  simply  needs  to  be  digged.  Will 
this  lead  to  a  concentration  of  all  iron  produc- 
tion ?  —  What  discoveries  and  inventions  will  the 
technical  development  of  the  next  years  bring  to 
light?  We  have  just  witnessed  at  Niagara  Falls 
a  first  attempt  to  utilize  the  natural  water  power 
for  productive  purposes  on  the  largest  scale,  so  as 
to  provide  the  smallest  and  most  distant  under- 
taking with  a  cheap  and  effective  motive  power. 
Does  this  indicate  a  step  in  the  direction  of  de- 
centralized production  ? 

While,  in  the  manufacturing  industries,  the 
victory  of  production  on  the  large  scale  seems  as- 


CONCLUSIONS.  141 

sured,  in  the  cotton  cultivation  of  the  southern 
states  the  small  producer,  the  farmer,  outstrips 
the  plantation  owner.  The  large  undertaking 
and  the  hired  labour  of  the  plantation  yield 
less  than  the  small  farm,  where  the  proprietor, 
in  a  limited  area,  uses  nothing  but  his  own 
physical  and  intellectual  working  power.  The 
large  planter  becomes  impoverished,  the  farmer 
secures  a  safe  position.  The  average  size  of  the 
cotton  plantation  decreases.  The  same  is  true 
wlierever  American  agriculture  proceeds  to  "in- 
tensive "  methods.  And  even  in  the  cotton  oil 
industry  we  see  a  relapse  into  decentralized  pro- 
duction, at  least  as  far  as  the  production  of  raw 
oil  and  its  by-products  is  concerned.  Outside  of 
the  American  and  the  Southern  Cotton  Oil  Com- 
panies a  number  of  small,  indei)endent  mills  have 
been  recently  established  which  claim  to  yiehl 
better  results  than  the  large  companies  witli  their 
staff  of  highly  paid  officials. 

No  definite  judgment  about  the  trust  question 
is  possible  as  yet.  It  is  too  recent,  and  its  pliases 
un(h*rgo  rapid  and  constant  clianges.  But  one 
thing  is  certain-.  th(^  mere  form  of  organization  is 
irrelevant, —  possii)ly  effect,  surely  not  cause. 
Armour  or  Chicago  Gas  Comj)anies  or  Sugar 
Trust;    Carnegie,   or  the  separated  Standard   Oil 


142  INDUSTRIAL   COMBINATIONSo 

Companies  under  uniform  management,  or  the 
American  Cotton  Oil  Company  —  the  form  of 
ownership  or  control  is  of  a  secondary  importance 
economically.  The  issue  proper  is,  and  will  be 
for  the  near  future:  shall  it  be  small  or  large 
undertakings,  or  to  what  extent  shall  there  be 
compromises  between  them? 

In  the  United  States,  public  opinion  has  to 
decide  finally  about  the  meaning  and  nature  of 
things.  It  will  not  be  able,  in  the  long  run, 
to  lean  upon  mere  theories  and  maxims ;  it  will 
be  forced  by  the  actual  development  to'  undergo 
changes,  to  reform  and  to  remodel  itself  in  cor- 
respondence with  the  great  laws  of  historical  prog- 
ress. The  old  ideas  about  the  infallibility  and 
exclusive  desirability  of  individual  and  unre- 
stricted activity  have  begun  to  fade.  The  masses 
still  adhere  to  them,  and  are  supported  therein  by 
the  newspajDcrs  and  politicians  who  prefer  popular- 
ity to  thoroughness  and  thought,  and  by  the  cheap 
economics  of  old-fashioned  every-day  economists, 
who  are  not  able  to  perceive  that,  since  the  time 
of  their  youth,  there  has  been  any  change  or  prog- 
ress in  practical  life,  as  well  as  in  the  scientific 
interpretation  of  it.  But  whosoever  tries  to 
understand  the  times,  at  once  perceives  the  dif- 
ferent character  of  modern  problems,  and  the 
necessity  of  new  standards  of  judgment. 


CONCLUSIONS.  143 

A  good  while  will  probably  elapse  before  the 
majority  of  the  public  has  learned  to  account  for 
what  has  happened,  and  to  draw  its  conclusions 
correspondingly.  This  process  possibly  will 
take  longer,  and  witness  more  painful  expe- 
riences, than  in  countries  where  an  institution 
exists,  whose  purpose  it  is  to  gather  informa- 
tion impartially  and  to  impart  it  to  the  public. 
The  earlier  attempts  to  deal  with  the  problem 
have  been  fruitless,  because  they  were  dictated 
by  mere  theory  and  by  partisan  views  as  to  what 
ought  to  be,  and  were  not  based  upon  a  suf- 
ficient and  intelligent  Aveighing  of  facts.  No 
definite  settlement  can  follow  before  the  results 
of  such  an  examination  have  entered  into  the 
public  mind,  and  every  attempt  will  be  thrown 
away  which  tries  to  block  the  road  of  economic 
evolution.  Marx  is  mistaken  in  saying  that  the 
development  of  society  has  been  caused  exclu- 
sively by  economic  forces.  But  dou])tless  an 
attempt  to  interfere  with  economic  forces  for 
the  sake  of  general  principles  is  not  very  jjrom- 
ising  to-day.  It  must  either  remain  unsuccess- 
ful, or  turn  out  disastrous  to  the  nation  whidi 
passes  through  it.  In  the  United  States,  past 
experiences  make  it  more  likely  that  the  former 
result  will  be  the  fate  of  every  arbitrary,  restric- 


144  INDUSTRIAL  COMBINATIONS. 

tive  legislation.  In  Europe,  it  has  come  to  be 
seen  that  legal  interference  can  only  to  a  limited 
extent  create  an  economic  situation.  It  can  pre- 
pare, accompany,  or  follow  it,  and  can  adapt 
existing  institutions  to  the  exigencies  of  a  novel 
situation.  European  legislators,  and  Congress 
in  this  country,  to  be  sure,  command  very  good 
lawyers;  but  trade  will  always  be  able  to  pa}- 
better  ones,  who  will  show  how  to  legall}'  cir- 
cumvent laws  which  prove  impracticable.  And 
success,  if  the  undertaking  attains  it,  will  show 
afterwards  that  they  were  right. 

The  situation  differs  too  widely  from  the  Euro- 
pean for  there  to  be  much  chance  for  socialism  in 
the  form  it  takes  in  America.  But  the  social 
idea  of  organization  has,  during  the  last  few  years, 
spread  in  many  directions.  The  progress  of  na- 
tional development,  the  increase  of  the  popula- 
tion of  the  country,  the  closer  and  closer  contact 
between  men  and  their  interests, — all  this  in- 
creases the  need  for  a  new  regulation  of  the  rela- 
tions of  individuals.  The  evident  result  of  the 
concentration  of  modern  undertakings  has  been 
the  unavoidable  advance  into  new  lines  of  legis- 
lation, such  as  tlie  attempts  of  the  interstate 
commerce  and  anti-trust  legislation.  Wherever  a 
great  public  interest  of  an  economic  order  arises, 


CONCLUSIONS.  145 

public  regulation  is  bound  to  follow.  To-day  the 
centralizing  movement  in  industry  has  not  yet 
reached  its  height.  Tlie  tide  is  apparently  still 
rising.  Therefore  an  increased  need  of  legislation 
during  the  next  few  years  is  more  than  probable. 

The  existing  trusts,  as  described,  are  no  ideal 
beings.  Like  all  human  creations,  they  show 
virtues  and  vices.  They  come  because  they  must ; 
their  influence  is  diversified,  their  effect  not  yet 
sufficiently  comprehensible.  Wherever  they  ap- 
pear, they  call  fortli  a  wild  excitement  and  the 
natural  resistance  against  everything  unusual. 
Now  they  prove  useful  in  the  hands  of  an  able  con- 
trol, now  dangerous  and  hurtful  to  their  own 
leaders,  as  well  as  to  guiltless  outsiders.  The 
misconception  of  their  nature,  which  took  them 
for  something  altogether  exceptional,  whilst  they 
were  really  only  one  form  of  a  group  of  phe- 
nomena, did  not  make  feasible  a  just  apprecia- 
tion of  them.  A  better  undcrstaiuling  will  replace 
liorror  and  malediction  with  an  attempt  to  check 
their  abuses,  to  extend  their  utilit3\ 

The  iirst  reasonable  propositions  have  already 
been  made.  In  a  form  which  corresponds  to  the 
character  of  the  people  and  constitution,  the  rail- 
road prol)lcm  has  been  entrusted  to  a  contrcdling 
commission ;  a  similar  measure  is  asked  for  to-day, 


146  INDUSTRIAL   COMBINATIONS. 

in  view  of  the  great  capitalistic  organization 
of  production.  The  means  by  which  it  is  at- 
tempted to  settle  the  great  social  problems  are 
in  many  respects  identical  all  over  the  world.  For 
problems  are  involved  which  concern  the  civiliza- 
tion of  the  world.  It  is  not  a  mechanical  regu- 
lation of  business  life,  which  would  lame  the 
individual  and  make  him  subservient  to  a  vast 
machine,  that  is  sought  for ;  but  a  display  of  the 
rights  of  the  nation,  by  means  of  a  control  in  the 
hands  of  the  community,  and  in  the  full  light 
of  publicity.  No  author  has  conceived  better 
the  meaning  of  the  corporation  problem  for  the 
commonwealth  than  Henry  C.  Adams.  He  asks 
for  puhlicity,  publication  of  the  results,  and  the 
ways  in  which  they  were  reached,  a  control  through 
public  bodies,  and  a  responsibility  of  the  individ- 
ual member  of  the  administration  of  the  cor- 
poration for  the  observance  of  the  necessary 
restrictions.  The  leaders  of  the  large  companies 
have  power  and  honour,  but  are  not  kept  face  to 
face  with  sufficient  public  supervision. 

The  idea  of  an  imposition  of  higher  taxation 
has  already  made  way  even  beyond  the  ranks  of 
the  extreme  radicals.  What  seems  to  the  author 
indispensable  for  the  beginning  of  an  effective 
solution  of  the  difficulties  is,  above  all,  a  uniform 


CONCLUSIONS.  147 

commercial  code,  or  at  least  a  uniform  corpo- 
ration law  for  the  whole  United  States.  A  uni- 
form practice  is  indis[)ensable  considering  that 
the  activity  of  the  great  enterprises  has  extended 
far  over  the  boundaries  of  individual  states.  It 
can  only  be  a  question  of  time,  until,  by  an  amend- 
ment of  the  constitution,  the  corporation  law  shall 
have  been  brought  within  the  reach  of  congres- 
sional legislation. 1 

Meanwhile,  the  repeal  of  the  present  anti-trust 
legislation  seems  desirable.  Passed  as  they  were 
merely  for  political  purposes,  even  those  politi- 
cians who  sought  by  their  passage  to  soothe  popu- 
lar feeling,  do  not  expect  them  to  be  complied 
with.  And  the  multiplicity  of  laws  of  such 
a  character  is  a  great  danger  to  the  community. 
It  explains  to  a  large  extent  tlie  astonishing  im- 
morality in  politics  and  in  the  political  thought 
of  large  classes.  The  necessity  of  circumventing 
so  many  laws  because  they  prescribe  tilings  simply 
impossible  must  in  the  long  run  undermine  the 
sense  of  legality  and  respect  for  hiw. 

'  The  American  Bar  Association  has  already  estabhshed  a 
Coniinittce  on  Uniform  State  Laws,  to  which  twenty-two  staU's 
and  territories  have  delegated  members.  Here  the  attempt  will 
probably  be  made  to  prepare  the  laws  uniformly  and  to  pass 
thera  in  the  individual  states,  as  had  been  done  with  the  Com- 
mercial Code  of  Germany  before  the  establishment  of  the 
Empire. 


148  INDUSTRIAL   COMBINATIONS. 

Whatever  experiences  tlie  next  few  years  may 
bring,  tlie  entire  character  of  the  movement  which 
this  investigation  has  tried  to  follow  makes  it 
evident  that  the  American  people  will  by  and  by 
realize  the  meaning  of  the  facts,  proceed  in  the 
same  direction,  and  adapt  its  actions  to  given  con- 
ditions. Wise  economic  policy  does  not  take  a 
second  step  before  the  first.  As  long  as  one 
does  not  feel  sure  of  a  complete  victory  of  the 
large  undertakings,  one  must  avoid  making  more 
concessions  than  are  really  called  for  by  the  situ- 
ation. A  progress  is  manifest,  but  also  increased 
dangers ;  an  increase  of  the  large  undertakings, 
and  the  augmentation  of  the  masses  dependent 
on  large  capital;  the  growth  of  the  colossus, 
and  an  increase  of  that  tendency  towards  self- 
destruction  which  is  innate  in  all  things.  It 
is  satisfactory  to  witness  the  genuine  impulse 
in  the  American  people  to  push  on  towards  further 
self-development,  and  to  secure  progress  by  an 
evolutionary  transition  into  new  forms  of  society, 
upon  the  basis  of  present  conditions,  which  can- 
not at  once  be  radically  changed.  Ready  as  it  is 
to  wait,  the  people  may  be  able  meantime  to  equip 
itself  with  the  administrative  machinerj'-  of  a  re- 
formed civil  service  ;  for  this  will  probably  have 
to  play  a  very  important  part  in  the  time  to  come. 


CONCLUSIONS.  149 

Without  it,   great   reforms    can   hardly  be   made 
effective. 

It  is  my  belief  that  the  future  belongs  neither 
to  the  prophets  of  individualism,  nor  to  the  ideals 
of  the  social-democrats.  Its  next  phases  belong 
to  social  reorganization.  And  the  probability 
is  that  this  will  show  a  corporate  character,  and 
will  be  sustained  and  controlled  by  public  super- 
vision. 


APPENDICES. 


APPENDIX   I. 

THE   STANDAKD   OIL   TRUST   AGREEMENT. 

This  agreement,  made  and  entered  upon  this  second 
day  of  January,  a.d.  1882,  by  and  between  all  the  })er- 
sons  who  shall  now  or  may  hereafter  execute  the  same 
as  parties  thereto,  ^V'itnesseth  : 

I.  It  is  intended  that  the  parties  to  this  agreement 
shall  embrace  three  classes,  to  wit: 

l.s^  All  the  Stockholders  and  members  of  the  fol- 
lowing Corporations  and  Limited  Partnerships,  to  wit : 
Acme  Oil  Company  (New  York),  Acme  Oil 
Company  (Pennsylvania),  Atlantic  Refining  Com- 
pany, of  I'hila. ;  Lush  &  Co.  Limited,  Camden 
Consolidated  Oil  Company,  Elizabethport  Acid 
Works,  Imperial  Refining  Company,  Limited, 
Clias.  Pratt  &  Co.,  Paine,  Ablett  &  Co.,  Limited, 
Standard  Oil  Company  (Ohio),  Standard  Oil  Co. 
(Pittsburg),  Smith's  Ferry  Oil  Trans.  Co.,  Solar 
Oil  Company  Limited,  Sone  &  Fleming  Manu- 
facturing Co.  Limited. 

Also    all    the    Stockholders    and    members   of    sucli 
other  Cor])orations  and  Limited    l^artiicrsliips  as  may 
licrcal'tci-  join  in  this  agreement  at  the   riMpiest  of  tlie 
Trustees  lierein  piovidiMl  for. 
163 


154  INDUSTRIAL   COMBINATIONS. 

2ncl.    The  following  individuals,  to  wit : 

W.  C.  Andrews,  Jno.  D.  Archbold,  Lide  K. 
Arter,  J.  A.  Bostwick,  Benj.  Brewster,  D.  Bush- 
nell,  Thos.  C.  Buslmell,  J.  N.  Camden,  Henry  L. 
Davis,  H.  M.  Flagler,  Mrs.  H.  M.  Flagler,  H.  M. 
Hanna,  and  Geo.  W.  Chapin,  D.  M.  Harkness, 
D.  M.  Harkness,  Trustee ;  S.  V.  Harkness,  John 
Huntington,  H.  A.  Hntchins,  Chas.  F.  Gr.  Heye, 
O.  B.  Jennings,  Charles  Lockhart,  A.  M.  McGregor, 
Wni.  H.  Macy,  Wm.  H.  Macy,  jr.,  estate  of  Josiah 
Macy,  jr.,  Wm.  H.  Macy,  jr.,  executor;  0.  H. 
Payne,  0.  H.  Payne,  Trustee ;  Chas.  Pratt,  Horace 
A.  Pratt,  C.  M.  Pratt,  A.  J.  Pouch,  John  D.  Rocke- 
feller, Wm.  Pockefeller,  Henry  H.  Rogers,  W.  P. 
Thompson,  J.  J.  Vandergrift,  William  T.  Ward- 
well,  W.  G.  Warden,  Jos.  L.  Warden;  Warden, 
Frew  &  Co.,  Louise  C.  Wheaton,  Julia  H.  York, 
Geo.  H.  Vilas,  M.  R.  Keith,  Geo.  F.  Chester, 
Trustees. 
Also,  all  such  individuals  as  may  hereafter  join  in 

this  agreement  at  the  request  of  the  Trustees  herein 

provided  for. 

3rd.  A  portion  of  the  Stockholders  and  members 
of  the  folloAving  Corporations  and  Limited  Partner- 
ships, to  wit : 

American  Lubricating  Oil  Co..  Baltimore  United 
Oil  Co.,  Beacon  Oil  Co.,  Bush  &  Denslow  Manuf'g 
Co.,  Central  Refining  Co.,  of  Pittsburg;  Chese- 
brough  Manuf'g  Co.,  Chess-Carley  Co.,  Consoli- 
dated Tank  Line  Co.,  Inland  Oil  Co.,  Keystone 


APPENDIX   I.  165 

Refining  Co.,  Maverick  Oil  Co.,  National  Transit 
Co.,  Portland  Kerosene  Oil  Co.,  Producers'  Con'd 
Land  and  Petroleum  Co.,  .Signal  Oil  Works  Lim- 
ited, Thompson  &  P)edford  Co.  Limited,  Devoe 
Manufg  Co.,  Eclipse  Lubricating  Oil  Co.  Limited, 
Empire  Refining  Co.  Limited,  Franklin  Pipe  Co. 
Limited,  Galena  Oil  AVorks  Limited,  Galena  Earm 
Oil  Co.  Limited,  Germania  Mining  Co.,  Vacuum 
Oil  Co.,  H.  C.  Van  Tine  &  Co.,  Limited,  Waters- 
Pierce  Oil  Co. 

Also,  Stockholders  and  members  (not  being  all 
thereof)  of  other  Corporations  and  Limited  I'artner- 
ships  who  may  hereafter  join  in  this  agreement  at  the 
request  of  the  Trustees  herein  provided  for. 

II.  The  parties  hereto  do  covenant  and  agree  to 
and  with  each  other  each  in  consideration  of  the 
mutual  covenants  and  agreements  of  the  others,  as 
follows : 

(1)  As  soon  as  practicable  a  Corporation  shall  be 
formed  in  each  of  the  following  States,  under  the  laws 
thereof,  to  wit:  Ohio,  New  York,  Pennsylvania  and 
New  Jersey ;  provided,  however,  that  instead  of  organ- 
izing a  new  Corporation,  any  existing  charter  and 
organization  may  be  used  for  the  purpose  when  it  can 
advantageously  be  done. 

(2)  The  pur])Oses  and  powers  of  said  Cor]iorations 
shall  l)e  to  mine  for,  ■|)rodnc(\  manufacture,  refine  and 
dciil  in  pel  ri)lt'uin  iuul  ;ill  its  products  and  all  tlie 
nmti'iials  used  in  such  business  and  transact  otiicr 
business  collateral  thereto.      Rut  other  purposes  and 


156  INDUSTRIAL   COMBINATIONS. 

powers  shall  be  embraced  in  the  several  charters  such 
as  shall  seem  expedient  to  the  parties  procviring  the 
charter,  or  if  necessary  to  comply  Avith  the  law,  the 
powers  aforesaid  may  be  restricted  and  reduced. 

(3)  At  any  time  hereafter,  when  it  may  seem  advis- 
able to  the  Trustees  herein  provided  for,  similar  Cor- 
porations may  be  formed  in  other  States  and  Territories. 

(4)  Each  of   said  Corporations  shall  be  known  as 

the  Standard  Oil  Company  of  (and  here  shall 

follow  the  name  of  the  State  or  Territory  by  virtue  of 
the  laws  of  which  said  Corporation  is  organized). 

(5)  The  Capital  Stock  of  each  of  said  Corporations 
shall  be  fixed  at  such  an  amount  as  may  seem  necessary 
and  advisable  to  the  parties  organizing  the  same,  in 
view  of  the  purpose  to  be  accomplished. 

(6)  The  shares  of  stock  of  each  of  said  Corpora- 
tions shall  be  issued  only  for  money,  property  or 
assets  equal  at  a  fair  valuation  to  the  par  value  of  the 
stock  delivered  therefor. 

(7)  All  of  the  property,  real  and  personal,  assets 
and  business  of  each  and  all  of  the  Corporations  and 
Limited  Partnerships  mentioned  or  embraced  in  class 
first  shall  be  transferred  to  and  vested  in  the  said 
several  Standard  Oil  Companies.  All  of  the  property, 
assets  and  business  in  or  of  each  particular  State  shall 
be  transferred  to  and  vested  in  the  Standard  Oil  Com- 
pany of  that  particular  State,  and  in  order  to  accom- 
plish such  purpose,  the  Directors  and  Managers  of 
each  and  all  of  the  several  Corporations  and  Limited 
Partnerships  mentioned  in  class  first,  are  hereby  author- 
ized and  directed  by  the  Stockholders  and  members 


APPENDIX    I.  157 

thereof  (all  of  them  being  parties  to  this  agreement) 
to  sell,  assign,  transfer,  convey  and  make  over,  for 
the  consideration  hereinafter  mentioned,  to  the  Stand- 
ard Oil  Company  or  Companies  of  the  proper  State  or 
States,  as  soon  as  said  Corporations  are  organized  and 
ready  to  receive  the  same,  all  the  property,  real  and 
personal,  assets  and  business  of  said  Corporations 
and  Lindted  Partnerships,  ('orrect  schedules  of  such 
property  assets,  and  business  shall  accompany  each, 
transfer. 

(8)  The  individuals  embraced  in  class  second  of  this 
agreement  do  each  for  himself  agree,  for  the  consider- 
ation hereinafter  mentioned,  to  sell,  assign,  transfer, 
convey  and  set  over,  all  the  property,  real  and  per- 
sonal, assets  and  business  mentioned  and  enabraced  in 
schedules  accompanying  such  sale  and  transfer,  to  the 
Standard  Oil  Company  or  Companies,  of  the  proper 
State  or  States,  as  soon  as  the  said  corporations  are 
organized  and  ready  to  receive  the  same. 

(9)  The  parties  end)raced  in  class  third  of  this 
agreement  do  covenant  and  agree  to  assign  and  trans- 
fer all  of  the  stock  held  by  them  in  the  Corjjorations 
or  Limited  I'artnerships  lu'vcin  iiaiucd.  to  the  Trustees 
herein  provided  for,  for  the  consideration  anil  upon 
the  terms  hereinafter  set  forth.  It  is  understood  and 
agreed  that  the  said  Trustees  and  their  successors  may 
hereafter  take  the  assignment  of  stocks  in  the  sami» 
or  similar  Companies  u})on  the  terms  herein  provided, 
and  that  whenever  and  as  often  as  all  the  stocks  of 
any  Corporation  and  Linuted  Partnership  are  vested 
in  said  Trustees,  the  proper  steps  may  then  be  taken 


158  INDUSTRIAL  COMBINATIONS. 

to  have  all  tlie  money,  property,  real  and  personal,  of 
such  Corporation  or  Partnership  assigned  and  conveyed 
to  the  Standard  Oil  Company  of  the  proper  State  on 
the  terms  and  in  the  mode  herein  set  forth,  in  which 
event  the  Trustees  shall  receive  stocks  of  the  Standard 
Oil  Company  equal  to  the  value  of  the  money,  prop- 
erty and  business  assigned,  to  be  held  in  place  of  the 
stocks  of  the  Company  or  Companies  assigning  such 
property. 

(10)  The  consideration  for  the  transfer  and  convey- 
ance of  the  money,  property  and  business  aforesaid 
to  each  or  any  of  the  Standard  Oil  Companies  shall  be 
stock  of  the  respective  Standard  Oil  Company  to  which 
said  transfer  or  conveyance  is  made,  equal  at  par  value 
to  the  appraised  value  of  the  money,  property  and 
business  so  transferred.  Said  stock  shall  be  delivered 
to  the  Trustees  hereinafter  provided  for,  and  their  suc- 
cessors, and  no  stock  of  any  of  said  Companies  shall 
ever  be  issued  except  for  money,  property  or  business 
equal  at  least  to  the  par  value  of  the  stock  so  issued, 
nor  shall  any  stock  be  issued  by  any  of  said  compa- 
nies for  any  purpose,  except  to  the  Trustees  herein 
provided  for,  to  be  held  subject  to  the  trusts  herein- 
after specified.  It  is  understood,  however,  that  this 
provision  is  not  intended  to  restrict  the  purchase,  sale 
and  exchange  of  property  of  said  Standard  Oil  Com- 
panies as  fully  as  they  may  be  authorized  to  do  by 
their  respective  charters,  provided  only  that  no  stock 
be  issued  therefor  except  to  said  Trustees. 

(11)  The  consideration  for  any  stock  delivered  to 
said  Trustees  as  above  provided  for,  as  well  as  for 


APPENDIX  I.  169 

stocks  delivered  to  said  Trustees  by  persons  men- 
tioned or  included  in  class  third  of  this  agreement, 
shall  be  the  delivery  by  said  Trustees,  to  the  persons 
entitled  thereto,  of  Trust  Certificates  hereinafter  j^ro- 
vided  for,  equal  at  par  value  to  the  par  value  of  the 
stocks  of  the  said  Standard  Oil  Companies  so  received 
by  said  Trustees,  and  equal  to  the  appraised  value 
of  the  stocks  of  other  Companies  or  Partnerships  de- 
livered to  said  Trustees.  [The  said  appraised  value 
shall  be  determined  in  a  manner  agreed  upon  by  the 
parties  in  interest  and  said  Trustees.]  It  is  luider- 
stood  and  agreed,  however,  that  the  said  Trustees 
may,  with  any  trust  funds  in  their  hands,  in  addition 
to  the  mode  above  provided,  purchase  the  bonds  and 
stocks  of  other  Companies  engaged  in  business  similar 
or  collateral  to  the  business  of  said  Standard  Oil 
Companies  on  such  terms  and  in  su(,'h  mode  as  they 
may  deem  advisable,  and  shall  hold  the  same  for  the 
benefit  of  the  owners  of  said  Trust  Certificates,  and 
may  sell,  assign,  transfer  and  pledge  such  bonds  and 
stocks  whenever  they  may  deem  it  advantageous  to 
said  Trust  so  to  do. 

III.  The  trusts  u])on  whicli  said  stocks  shall  be 
held,  and  the  number,  powers  and  duties  of  said 
Trustees,  shall  be  as  follows : 

(1)  The  number  of  Trustees  shall  be  nine. 

(2)  J.  D.  Eockefeller,  O.  H.  Payne  and  W'm.  Rock- 
efeller are  hereby  a])pointed  Trustees,  to  hold  their 
office  until  the  first  Wednesday  of  A})ril.  a.d.  lSS."i. 

(3)  J.  A.  Bostwick,  H.  M.  Flagler  and  W.  (i.  War- 


160  INDUSTRIAL   COMBINATIONS. 

den  are  hereby  appointed  Trustees,  to  hold  their  office 
nntil  the  first  Wednesday  of  April,  aa>.  1884. 

(4)  Chas.  Pratt,  Benj.  Brewster  and  Jno.  D.  Areh- 
bold  are  hereby  appointed  Trustees,  to  hold  their 
office  until  the  first  Wednesday  of  April,  a.d.  1883. 

(5)  Elections  for  Trustees  to  succeed  those  herein 
appointed  shall  be  held  annually,  at  which  election  a 
sufficient  number  of  Trustees  shall  be  elected  to  fill 
all  vacancies  occurring  either  from  expiration  of  the 
term  of  office  of  Trustee  or  from  any  other  cause.  All 
Trustees  shall  be  elected  to  hold  their  office  for  three 
years,  except  those  elected  to  fill  a  vacancy  arising 
from  any  cause,  except  expiration  of  term,  who  shall 
be  elected  for  the  l)alance  of  the  term  of  the  Trustee 
whose  place  they  are  elected  to  fill.  Every  Trustee 
shall  hold  his  office  until  his  successor  is  elected. 

(6)  Trustees  shall  be  elected  by  ballot  by  the  own- 
ers of  Trust  Certificates  or  their  proxies.  At  all  meet- 
ings the  owners  of  Trust  Certificates  who  may  be 
registered  as  such  on  the  books  of  the  Trustees  may 
vote  in  person  or  by  proxy,  and  shall  have  one  vote 
for  each  and  every  share  of  Trust  Certificates  standing 
in  their  names,  but  no  such  owner  shall  be  entitled  to 
vote  upon  any  share  which  has  not  stood  in  his  name 
thirty  days  prior  to  the  day  appointed  for  the  election. 
The  transfer  books  may  be  closed  for  thirty  days  im- 
mediately preceding  the  annual  election.  A  majority 
of  the  shares  represented  at  such  election  shall  elect. 

(7)  The  annual  meeting  of  the  owners  of  said  Trust 
Certificates  for  the  election  of  Trustees,  and  for  other 
business,  shall  be  held  at  the  office  of  the  Trustees,  in 


APPENDIX   I.  161 

the  City  of  New  York,  on  the  first  Wednesday  of 
April  of  each  year,  unless  the  place  of  meeting  be 
changed  by  the  Trustees,  and  said  meeting  may  be 
adjourned  from  day  to  day  until  its  business  is  com- 
pleted. Special  meetings  of  the  owners  of  said  Trust 
Certificates  may  be  called  by  the  majority  of  the 
Trustees  at  such  times  and  places  as  they  may  appoint. 
It  shall  also  be  the  duty  of  the  Trustees  to  call  a 
special  meeting  of  holders  of  Trust  Certificates  when- 
ever requested  to  do  so  by  a  petition  signed  by  the 
holders  of  ten  per  cent,  in  value  of  such  certificates. 
The  business  of  such  special  meetings  shall  be  con- 
fined to  the  object  specified  in  the  notice  given  there- 
for. Notice  of  the  time  and  place  of  all  meetings  of 
the  owners  of  Trust  Certificates  shall  be  given,  by 
personal  notice  as  far  as  possible,  and  by  public  notice 
in  one  of  the  principal  newspapers  in  each  State  in 
which  a  Standard  Oil  Company  exists,  at  least  ten 
days  before  such  meeting.  A.t  any  meeting,  a  majority 
in  the  value  of  the  holders  of  Trust  Certificates  rep- 
resented consenting  thereto,  by-laws  may  be  made, 
amended  or  repealed  relative  to  the  mode  of  election 
of  Trustees  and  other  business  of  the  holders  of  Trust 
Certificates,  provided,  however,  that  said  l)y-laws  shall 
be  in  conformity  with  this  agreement.  By-laws  nuiy 
also  be  made,  amended  and  repealed  at  any  meeting, 
by  and  with  the  consent  of  a  majority  in  value  of  the 
holders  of  Trust  Certificates,  which  alter  this  agree- 
ment relative  to  the  number,  powers  and  duties  of 
the  Trustees  and  to  other  matters  tending  to  the  more 
efficient  accomplishment  of  the  objects  for  which  the 


162  INDUSTRIAL   COMBINATIONS. 

Trust  is  created,  provided  only  that  the  essential  in- 
tents and  purposes  of  this  agreement  be  not  thereby- 
changed. 

(8)  Whenever  a  vacancy  occurs  in  the  Board  of 
Trustees  more  than  sixty  days  prior  to  the  annual 
meeting  for  the  election  of  Trustees,  it  shall  be  the 
duty  of  the  remaining  Trustees  to  call  a  meeting  of 
the  owners  of  the  Standard  Oil  Trust  Certificates 
for  the  purpose  of  electing  a  Trustee  or  Trustees  to 
fill  the  vacancy  or  vacancies.  If  any  vacancy  occurs 
in  the  Board  of  Trustees,  from  any  cause,  within 
sixty  days  of  the  date  of  the  annual  meeting  for  the 
election  of  Trustees,  the  vacancy  may  be  filled  by 
a  majority  of  the  remaining  Trustees,  or,  at  their 
option,  may  remain  vacant  until  the  annual  election. 

(9)  If,  for  any  reason,  at  any  time,  a  Trustee  or 
Trustees  shall  be  appointed  by  any  Court  to  fill  any 
vacancy  or  vacancies  in  said  Board  of  Trustees,  the 
Trustee  or  Trustees  so  appointed  shall  hold  his  or  the 
respective  office  or  offices  only  until  a  successor  or 
successors  shall  be  elected  in  the  manner  above  pro- 
vided for. 

(10)  Whenever  any  change  shall  occur  in  the  Board 
of  Trustees,  the  legal  title  to  the  stock  and  other  prop- 
erty held  in  trust  shall  pass  to  and  vest  in  the  suc- 
cessors of  said  Trustees  without  any  formal  transfer 
thereof.  But  if  at  any  time  such  formal  transfer  shall 
be  deemed  necessary  or  advisable,  it  shall  be  the  duty 
of  the  Board  of  Trustees  to  obtain  the  same,  and  it 
shall  be  the  duty  of  any  retiring  Trustee  or  the  admin- 
istrator or  executor  of  any  deceased  Trustee  to  make 
said  transfer. 


APPENDIX   I.  163 

(11)  The  Trustees  shall  prepare  Certificates  which 
shall  show  the  interest  of  each  beneficiary  in  said 
trust,  and  deliver  them  to  the  persons  properly  entitled 
thereto.  They  shall  be  divided  into  shares  of  the  par 
value  of  one  hundred  dollars  each,  and  shall  be  known 
as  Standard  Oil  Trust  Certificates,  and  shall  be  issued 
subject  to  all  the  terms  and  conditions  of  this  agree- 
ment. The  Trustees  shall  have  power  to  agree  upon 
and  direct  tlie  form  and  contents  of  said  Certifi- 
cates, and  the  mode  in  which  they  shall  be  signed, 
attested  and  transferred.  The  Certificates  shall  con- 
tain an  express  stipulation  that  the  holders  thereof 
shall  be  bound  by  the  terms  of  this  agreement,  and 
by  the  by-laws  herein  provided  for. 

(12)  No  Certificates  shall  be  issued  except  for  stocks 
and  bonds  held  in  trust,  as  herein  provided  for,  and 
the  par  value  of  Certificates  issued  by  said  Trustees 
shall  be  equal  to  the  par  value  of  the  stocks  of  said 
Standard  Oil  Companies,  and  the  appraised  value  of 
other  bonds  and  stocks  held  in  trust.  The  various 
bonds,  stocks  and  moneys  held  under  said  Trust  shall 
be  held  for  all  parties  in  interest  jointly,  and  the 
Trust  Certificates  so  issued  shall  be  the  evidence  of 
the  interest  held  by  the  several  parties  in  this  Trust. 
No  duplicate  Certificates  shall  be  issued  by  the  Trus- 
tees, except  upon  surrender  of  the  original  Certificate 
or  Certificates  for  cancellation,  or  upon  satisfactory 
proof  of  the  loss  thereof,  and  in  the  latter  case  they 
shall  require  a  sufficient  bond  of  indemnity. 

(13)  The  stocks  of  the  various  Standard  Oil  Com- 
panies held  in  trust  by  said  Trustees  shall  not  be  sold, 


164  INDUSTRIAL   COMBINATIONS. 

assigned  or  transferred  by  said  Trustees,  or  by  tbe 
beneficiaries,  or  by  both  combined,  so  long  as  the  Trust 
endures.  Tbe  stocks  and  bonds  of  other  Corporations, 
held  by  said  Trustees,  may  be  by  them  exchanged  or 
sold  and  the  proceeds  thereof  distributed  jjj'o  rata  to 
the  holders  of  Trust  Certificates,  or  said  proceeds  may 
be  held  and  reinvested  by  said  Trustees  for  the  pur- 
poses and  uses  of  the  Trust,  provided,  however,  that 
said  Trustees  may  from  time  to  time  assign  such 
shares  of  stock  of  said  Standard  Oil  Companies  as 
may  be  necessary  to  qualify  any  person  or  persons 
chosen  or  to  be  chosen  as  Directors  and  Officers  of  any 
of  said  Standard  Oil  Companies. 

(14)  It  shall  be  the  duty  of  said  Trustees  to  receive 
and  safely  to  keep  all  interest  and  dividends  declared 
and  paid  upon  any  of  the  said  bonds,  stocks  and  moneys 
held  by  them  in  trust,  and  to  distribute  all  moneys 
received  from  such  sources  or  from  sales  of  trust  prop- 
erty or  otherwise  by  declaring  and  paying  dividends 
upon  the  Standard  Trust  Certificates  as  funds  accumu- 
late, which  in  their  judgment  are  not  needed  for  the 
uses  and  expenses  of  said  Trust.  The  Trustees  shall, 
however,  keep  separate  accounts  and  receipts  from 
interest  and  dividends,  and  of  receipts  from  sales  or 
transfers  of  trust  property,  and  in  making  any  distri- 
bution of  trust  funds,  in  which  moneys  derived  from 
sales  or  transfers  shall  be  included,  shall  render  the 
holders  of  Trust  Certificates  a  statement  showing 
what  amount  of  the  fund  distributed  has  been  derived 
from  such  sales  or  transfers.  The  said  Trustees  may 
be  also  authorized  and  empowered   by  a  vote  of   a 


APPENDIX   I.  165 

majority  in  value  of  holders  of  Trust  Certificates, 
whenever  stocks  or  bonds  have  accumulated  in  their 
hands  from  money  purchases  thereof,  or  the  stocks 
or  l)onds  held  by  them  have  increased  in  value,  or 
stock  dividends  shall  have  been  declared  by  any  of 
the  Companies  whose  stocks  are  held  by  said  Trus- 
tees, or  whenever  from  any  such  cause  it  is  deemed 
advisable  so  to  do,  to  increase  the  amount  of  Trust 
Certificates  to  the  extent  of  such  increase  or  accumula- 
tion of  values  and  to  divide  the  same  among  tlie  per- 
sons then  owning  Trust  C'ertificates  i^ro  rata. 

(15)  It  shall  be  the  duty  of  said  Trustees  to  exer- 
cise general  supervision  over  the  affairs  of  said  sev- 
eral Standard  Oil  Companies,  and  as  far  as  practi- 
cable over  the  other  Companies  or  Partnerships,  any 
portion  of  whose  stock  is  lield  in  said  Trust.  It  shall 
be  their  duty  as  Stockholders  of  said  (Companies  to 
elect  as  Directors  and  Officers  thereof  faithful  and 
competent  men.  They  may  elect  themselves  to  such 
positions  when  they  see  fit  so  to  do,  and  shall  endeavour 
to  have  the  affairs  of  said  Comi)anies  managed  and 
directed  in  the  manner  they  may  deem  most  condu- 
cive to  the  best  interests  of  the  holders  of  said  Trust 
Certificates. 

(IG)  All  the  ])owers  of  the  Trustees  nuay  be  exer- 
cised by  a  majority  of  their  number. 

They  may  appoint  from  their  own  inimber  an  Ex- 
ecutive and  other  Committees.  A  majority  of  eacli 
Committee  shall  exercise  all  the  powers  which  the 
Trustees  may  confer  ui)on  sucli  Committee. 

(17)  The  Trustees  may  employ  and  pay   all  such 


166  INDUSTRIAL  COMBINATIONS. 

Agents  and  Attorneys  as  they  may  deem  necessaiy  in 
the  management  of  said  trust. 

(18)  Each  Trustee  shall  be  entitled  to  a  salary  for 
his  services  not  exceeding  twenty-five  thousand  dol- 
lars per  annum,  except  the  President  of  the  Board, 
who  may  be  voted  a  salary  not  exceeding  thirty  thou- 
sand dollars  per  annum,  which  salaries  shall  be  fixed 
by  said  Board  of  Trustees.  All  salaries  and  expenses 
connected  with  or  growing  out  of  the  Trust  shall  be 
paid  by  the  Trustees  from  the  trust  fund. 

(19)  The  Board  of  Trustees  shall  have  its  principal 
office  in  the  City  of  New  York,  unless  changed  by  a 
vote  of  the  Trustees,  at  which  office,  or  in  some  place 
of  safe  deposit  in  said  City,  the  bonds  and  stocks  shall 
be  kept.  The  Trustees  shall  have  power  to  adopt  rules 
and  regulations  pertaining  to  the  meetings  of  the  Board, 
the  election  of  Officers  and  the  management  of  the 
Trust. 

(20)  The  Trustees  shall  render  at  each  annual  meet- 
ing a  statement  of  the  affairs  of  the  Trust.  If  a  termi- 
nation of  the  Trust  be  agreed  upon,  as  hereinafter 
provided,  or  within  a  reasonable  time  prior  to  its  ter- 
mination by  lapse  of  time,  the  Trustees  shall  furnish 
to  the  holders  of  the  Trust  Certificates  a  true  and 
perfect  inventory  and  appraisement  of  all  stocks  and 
other  property  held  in  trust,  and  a  statement  of  the 
financial  affairs  of  the  various  Companies  whose  stocks 
are  held  in  trust. 

(21)  The  Trust  shall  continue  during  the  lives  of 
the  survivors  and  siirvivor  of  the  Trustees  in  this 
agreement  named,  and  for  twenty-one  years  thereafter, 


APPENDIX   I.  167 

provided,  however,  that  if  at  any  time  after  the  ex- 
piration of  ten  3^ears  two-thirds  of  all  the  holders  in 
value,  or  if  after  the  expiration  of  one  year  ninety  per 
cent,  of  all  the  holders  in  value  of  Trust  Certificates 
shall,  at  a  meeting  of  holders  of  Trust  Certiticates 
called  for  that  purpose,  vote  to  terminate  this  Trust  at 
some  time  to  be  by  them  then  and  there  fixed,  the 
said  Trust  shall  terminate  at  the  date  so  fixed.  If  the 
holders  of  Trust  Certificates  shall  vote  to  terminate 
the  Trust  as  aforesaid,  they  may,  at  the  same  meeting, 
or  at  a  subsequent  meeting  called  for  that  purpose, 
decide  by  a  vote  of  two-thirds  in  value  of  their  num- 
ber the  mode  in  which  the  affairs  of  the  Trust  shall  be 
wound  up,  and  whether  the  trust  property  shall  be 
distril)uted  or  whether  part,  and  if  so,  what  part  shall 
be  divided  and  what  part  sold,  and  whether  such  sales 
shall  be  public  or  private.  The  Trustees,  who  shall 
continue  to  hold  their  offices  for  that  purpose,  shall 
make  the  distribution  in  the  mode  directed,  or,  if  no 
mode  be  agreed  upon,  by  two-thirds  in  value  as  afore- 
said, the  Trustees  shall  make  distribution  of  the  trust 
property  according  to  law.  But  said  distribution,  how- 
ever made,  and  Avhether  it  be  of  property,  or  values,  or 
of  both,  shall  be  just  and  equitable,  and  such  as  to 
insure  to  each  owner  of  a  Trust  Certificate  his  due 
proportion  of  the  trust  property  or  the  value  thereof. 

(22)  If  the  Trust  shall  be  terminated  by  the  expira- 
tion of  the  time  for  which  it  is  created,  the  distribution 
of  the  trust  property  shall  be  directed  and  made  in 
the  mode  above  provided. 

(23)  This  Agreement,  together  witli  the  registry  of 


168  INDUSTRIAL   COMBINATIONS. 

Certificates,  books  of  accounts,  and  other  books  and 
papers  connected  with  the  business  of  said  Trust,  shall 
be  safely  kept  at  the  principal  office  of  said  Trustees. 

[SIGNATURES.] 


SUPPLEMENTAL   AGREEMENT. 

WJiereas  in  and  by  an  agreement  dated  January 
2nd,  1882,  and  known  as  the  Standard  Trust  Agree- 
ment, the  parties  thereto  did  mutually  covenant  and 
agree,  inter  alia,  as  follows,  to  wit :  That  Corporations 
to  be  known  as  Standard  Oil  Companies  of  various 
States  should  be  formed,  and  that  all  of  the  property, 
real  and  personal,  assets  and  business  of  each  and  all  of 
the  Corporations  and  Limited  Partnerships  mentioned 
or  embraced  in  class  first  of  said  Agreement  should 
be  transferred  and  vested  in  the  said  several  Standard 
Oil  Companies ;  that  all  of  the  property,  assets  and 
business  in  or  of  each  particular  State  should  be  trans- 
ferred to  and  vested  in  the  Standard  Oil  Company 
of  that  particular  State,  and  the  Directors  and  Man- 
agers of  each  and  all  of  the  several  Corporations  and 
associations  mentioned  in  class  first  were  authorized 
and  directed  to  sell,  assign,  transfer,  and  convey  and 
make  over  to  the  Standard  Oil  Company  or  Companies 
of  the  proper  State  or  States,  as  soon  as  said  corpora- 
tions were  organized  and  ready  to  receive  the  same,  all 
the  property,  real  and  personal,  assets  and  business  of 
said  Corporations  or  Associations;  and  whereas  it  is 
not  deemed  expedient  that  all  of  the  Companies  and 
Associations  mentioned  should  transfer  their  property 


APPENDIX   I.  169 

to  the  said  Standard  Oil  Companies  at  the  present 
time,  and  in  case  of  some  Companies  and  Associations 
it  may  never  be  deemed  expedient  that  the  said  trans- 
fer shouhl  l)e  made,  and  said  Companies  and  Associa- 
tions go  ont  of  existence ;  and  tvhereas  it  is  deemed 
advisable  that  a  discretionary  power  should  be  vested 
in  the  Trustees  as  to  when  such  transfer  or  transfers 
should  take  place,  if  at  all.  Now,  it  is  hereby  mutually 
agreed  between  the  parties  to  the  said  Trust  Agree- 
ment, and  as  supjdementary  thereto,  that  the  Trustees 
named  in  the  said  Agreement  and  their  successors 
shall  have  the  power  and  authority  to  decide  what 
Companies  shall  convey  their  property  as  in  said 
Agreement  contemplated,  and  when  the  said  sales  and 
transfers  shall  lake  })lace,  if  at  all,  and  until  said 
Trustees  sliall  so  decide,  each  of  said  Companies  sliall 
remain  in  existence  and  retain  its  ])roperty  and  l)nsi- 
ness,  and  the  Trustees  shall  holil  the  stocks  thereof 
in  trust,  as  in  said  Agreement  ])r()vided.  In  tlie  exer- 
cise of  said  discretion  the  Trustei^s  shall  act  by  a 
majority  of  their  number  as  })r()vided  in  said  Trust 
Agreement.  All  jiortions  of  said  Trust  Agreement 
relating  to  this  sulijeci  shall  be  eoiisidiM'ed  so  changed 
as  to  be  in  harmony  with  this  supplemental  Agreement. 

In  witness  whereof,  the  said  i)arties  have  subscrilnnl 
this  Agreeiuent,  this  4th  day  of  January,  1882, 

[Duly  signed  by  the  sanu'  i)arties.] 


170  INDUSTRIAL   COMBINATIONS. 


APPENDIX   II. 

BY-LAWS   OF   THE   TRUSTEES   OF   THE 
STANDARD   OIL  TRUST. 

ARTICLE  L 

ELECTION    OF    TRUSTEES. 

Trustees  shall  be  elected  by  ballot  by  the  owners  of 
Trust  Certificates  or  their  proxies. 

Elections  of  Trustees  to  succeed  those  already  ap- 
pointed shall  be  held  annually,  at  which  election  a 
sufficient  number  of  Trustees  shall  be  elected  to  fill 
all  vacancies  occurring  either  from  expiration  of  the 
term  of  office  of  any  Trustee  or  from  any  other  cause. 

All  Trustees  shall  be  elected  to  hold  their  office  for 
three  years,  except  those  elected  to  fill  a  vacancy 
arising  from  any  cause  except  expiration  of  term,  who 
shall  be  elected  for  the  balance  of  the  term  of  the 
Trustee  whose  place  they  are  elected  to  fill.  Every 
Trustee  shall  hold  his  office  until  his  successor  is 
elected. 

The  annual  meeting  of  the  holders  of  Trust  Certifi- 
cates and  the  election  of  Trustees  shall  be  held  at  the 
office  of  the  Trustees  in  the  City  of  New  York  on 
the  first  Wednesday  in  April  of  each  year,  unless 
otherwise  ordered  by  the  Trustees,  and  the  said  meet- 


APPENDIX  n.  171 

ing  may  be  adjourned  from  day  to  day  until  its  busi- 
ness is  completed. 

Special  meetings  of  the  holders  of  Trust  Certificates 
may  be  called  by  a  majority  of  all  the  Trustees  at  such 
time  and  place  as  they  may  appoint. 

Special  meetings  shall  also  be  called  by  a  majority 
of  the  Trustees  whenever  requested  so  to  do,  by  a 
request  signed  by  the  holders  of  ten  per  cent,  in  value 
of  Trust  Certificates. 

The  business  of  such  special  meetings  shall  be 
confined  to  the  objects  specified  in  the  notice  given 
therefor. 

Notice  of  the  time  and  place  of  all  meetings  of 
owners  of  Trust  Certificates  shall  be  given  by  personal 
notice  as  far  as  possible,  and  shall  also  be  advertised 
in  one  of  the  principal  newspapers,  published  in  each 
State  in  which  a  Standard  Oil  Company  exists,  at  least 
ten  days  previous  to  the  time  of  meeting. 

At  all  meetings  the  owners  of  Trust  Certificates, 
who  may  be  registered  as  such  on  the  books  of  the 
Trustees,  may  vote  in  person  or  by  proxy,  and  shall 
have  one  vote  for  each  and  every  share  of  Trust  Cer- 
tificates standing  in  their  names,  but  no  such  owner 
shall  be  entitled  to  vote  upon  any  share  which  has 
not  stood  in  his  name  thirty  days  prior  to  the  day 
appointed  for  the  election. 

The  Transfer  Books  nu\y  be  closed  for  tliirty  days 
iniiiu'diately  preceding  the  annual  election. 

A  majority  of  tlie  shares  represented  at  sueli  elec- 
tion shall  elect. 

At  all  elections  of  Trustees  the  Board  of  Trustees 


172  INDUSTRIAL   COMBINATIONS. 

shall  be  the  judges  of  the  qualification  of  voters;  shall 
prescribe  rules  and  regulations  for  voting;  appoint 
Tellers  to  direct  and  count  the  votes  and  cause  the 
result  of  the  election  to  be  entered  in  full  on  their 
minutes. 

The  Trustees  may  commit  their  j)0wers  in  this 
matter  to  a  Committee  of  their  own  members. 

The  election  shall  be  held  on  the  day  designated 
for  that  purpose,  unless  prevented  by  accident,  in 
which  case  the  Trustees  shall  designate  another  day 
for  the  election. 

ARTICLE   IL 

BOARD    OF    TRUSTEES. 

The  Board  of  Trustees  at  their  first  meeting  after 
their  annual  election  shall  elect  by  ballot  from  their 
own  number  a  President,  Vice-President,  Treasurer 
and  Secretary,  and  such  officers  shall  hold  their  offices 
during  the  pleasure  of  the  Board.  Whenever  a  va- 
cancy occurs  in  the  Board  of  Trustees  more  than 
sixty  days  prior  to  the  annual  meeting  for  the  election 
of  Trustees,  it  shall  be  the  duty  of  the  remaining 
Trustees  to  call  a  meeting  of  the  holders  of  the  Trust 
Certificates  for  the  purpose  of  electing  a  Trustee  or 
Trustees  to  fill  the  vacancy  or  vacancies. 

If  any  vacancy  occurs  in  the  Board  of  Trustees 
from  any  cause  within  sixty  days  of  the  date  of  the 
annual  meeting  for  the  election  of  Trustees,  the  va- 
cancy may  be  filled  by  a  majority  of  the  remaining 
Trustees,  or  at  their  option  may  remain  vacant  until 
the  annual  election. 


APPENDIX   II.  173 

The  Board  may  also  appoint  an  Assistant  Treasurer, 
Assistant  Secretary,  Auditor  and  such  additional  offi- 
cers, agents,  executive  and  other  committees  as  it  may 
deem  advisable  and  remove  the  same  at  its  pleasure. 

In  the  absence  of  the  President  and  Vice-President, 
the  l)oard  nuiy  a})point  a  Chairnuui  pro  tempore; 
during  a  prolonged  absence  or  inability  of  the  Presi- 
dent or  any  other  officer,  the  Board  may  appoint 
substitutes  pro  tempore,  and  on  the  death  or  resigna- 
tion of  the  President  or  other  officers,  it  shall  fill  the 
vacancy. 

A  majority  of  the  Trustees  shall  be  required  to 
constitute  a  quorum  for  the  transaction  of  business, 
but  less  than  a  quorum  may  adjourn  from  time  to 
time  and  from  place  to  place. 

Regular  meetings  of  the  Board  of  Trustees  shall  l)e 
held  on  the  first  Wednesday  of  January,  April,  .July 
and  October  of  each  year,  unless  the  same  shall  be  a 
legal  holiday,  in  which  event  the  meeting  shall  be  held 
on  the  day  following. 

ARTICLE   III. 

THK    PRESIDENT. 

The  President  shall  preside  at  all  meetings  of  the 
owners  of  Trust  C'ertiti(;ates  or  Trustees  if  present ; 
appoint  or  remove  all  officers  and  agents  other  than 
those  elected  by  the  owners  of  Trust  Certificates  or 
the  Board  of  Trustees ;  call  meetings  of  the  Hoard  of 
Trustees,  when  requested  by  a  majority  ol'  the  Trus- 
tees in  writing ;  sign  all  certificates  of  shares,  and  liave 
a  general  care,  supervision  and  direction  of  the  affairs 


174  INDUSTRIAL   COjVIBINATIONS. 

of  the  Trust.  He  shall  have  power  to  call  meetings  of 
the  Board  from  time  to  time  when  he  shall  think 
proper;  to  sign  certificates  of  shares  in  blank  and 
leave  them  with  the  Treasurer  in  sufficient  numbers  to 
provide  for  the  prompt  transfer  of  shares. 

In  the  event  of  the  death,  absence  or  inability  of 
the  President  to  perform  the  duties  imposed  upon  him 
by  these  by-laws  and  the  orders  of  the  Board  of  Trus- 
tees, the  Vice-President  may  exercise  his  powers  and 
perform  his  duties,  subject  to  the  control  of  the  Board 
of  Trvistees  or  Executive  Committee. 

ARTICLE   IV. 

THE    SECRETARY. 

It  shall  be  the  duty  of  the  Secretary  to  notify  the 
members  thereof  of  all  meetings  of  the  Board  of  Trus- 
tees, when  required  by  the  President  or  by  a  majority 
of  the  Trustees  in  writing ;  to  attend  such  meetings 
when  practicable ;  keep  true  records  of  the  proceed- 
ings ;  attest  such  records  after  meeting,  by  his  signa- 
ture ;  safely  keep  all  documents  and  papers  which 
shall  come  into  his  possession  and  truly  keep  the 
books  and  accounts  of  the  Trust  appertaining  to  his 
office,  so  as  at  all  times  to  show  the  real  condition  of 
the  Trust  affairs,  and  shall  present  statements  thereof 
when  required  by  the  Board.  He  shall  keep  books  in 
which  transfers  of  shares  may  be  made  by  any  owner 
of  Trust  Certificates  or  his  Attorney  duly  constituted 
in  writing ;  also  a  share  Ledger  and  Certificate  Book ; 
prepare  new  certificates  upon  the  transfer  of  shares 
and  surrender  of  the  old  certificates,  and  keep  a  regis- 
ter of  all  the  certificates  issued. 


APPENDIX   II.  175 

On  the  day  of  the  annual  election  the  Secretary  shall 
furnish  for  the  use  of  the  inspectors  an  alphabetical 
list  of  the  names  of  all  the  owners  of  Trust  Certificates 
who  shall  have  been  registered  as  such  for  thirty  days 
prior  to  said  election.  The  Assistant  Secretary  shall 
perform  such  of  the  duties  of  the  Secretary  as  may  be 
required  of  him  by  the  Board  of  Trustees-. 

ARTICLE   V. 

TREASURER. 

It  shall  be  the  duty  of  the  Treasurer  to  keep  and 
account  for  all  moneys,  funds,  and  property  of  the 
Trust  which  shall  come  into  his  hands,  and  he  shall 
render  such  accounts  and  present  such  statements  to 
the  Trustees  and  Executive  Committee  as  may  be  re- 
quired of  him. 

l)is])ursements  shall  only  be  made  by  him  under 
resolutions  of  the  Board  of  Trustees,  or  by  the  Execu- 
tive Committee,  or  upon  vouchers  approved  by  the 
proper  officers. 

He  shall  sign  certificates  of  shares  when  presented 
to  him  after  they  shall  have  been  signed  by  the 
President. 

The  Assistant  Treasurer  shall  i)erform  such  of  the 
duties  of  Treasurer  as  may  be  required  of  him  by  the 
Board  of  Trustees. 

ARTICLE   VL 

EXECUTIVE    COMMITTEE. 

The  Executive  Committee  shall  jiossess  and  exercise 
by  a  majority  of  all  its  membei's  all  the  powers  and 


176  INDUSTRIAL   COMBINATIONS. 

duties  of  the  Board  of  Trustees,  but  only  when  the 
Board  shall  not  be  in  session.  They  shall  keep  a  rec- 
ord of  all  their  proceedings,  which  shall  be  certified  by 
the  Secretary  under  his  hand,  which  record  shall  be 
read  at  the  next  ensuing  meeting  of  the  Board  of  Trus- 
tees. The  Secretary  shall  call  meetings  of  this  Com- 
mittee on  the  requisition  of  the  President  of  the  Board 
or  of  any  of  its  members. 

ARTICLE   VII. 

The  fiscal  year  of  this  Trust  shall  be  the  calendar 
year. 

ARTICLE   VIII. 

These  by-laws  may  be  altered,  amended  or  repealed 
at  any  meeting  of  the  owners  of  Trust  Certificates  by 
a  vote  of  majority  in  value  of  all  the  owners  repre- 
sented, provided,  however,  that  all  by-laws  relative  to 
formal  meetings  and  formal  duties  of  the  Trustees  and 
Officers  may  be  altered  by  the  Board  of  Trustees. 


APPENDIX  III.  177 


APPENDIX   III. 

STATUT    DER    DEUTSCH-AMERIKANISCHE:N^ 
PETROLEUM-GESELLSCHAFT. 

(^Gedruckt  1891.) 

I.    ALLGEMEINE   BESTIMMUNGEN. 

§  1. 

Die     Deutsch-Amerikanische     Petroleum-Gesellschaft 

bezweckt  deu  Ik'trieb  von  I't'truleuinliandel. 

Zum  Cieschaftsbetrieb  der  Gesellschaft  gehoren  ins- 
besondere : 

1.  der  Erwerb,  die  Bebaiumg  oder  sonstige  Eiiuich- 
tung  von  Grundstiicken  flir  die  Zwecke  der  Gesellschaft 
im  In-  und  Aiislande, 

2.  der  Erwerb  von  Schitt'en,  Eiseiibalinwaggons,  iind 
sonstiger  Betriebsmittel  filr  die  Zwecke  der  Gesell- 
schaft, 

3.  die  Be-  und  Verfrachtung  der  der  (iesellscliaft 
gehorigen  Schitt'e,  die  Charterung  und  Vercharteruug 
von  fremden  Scliitfeu, 

4.  der  Kauf  und  Verkauf  von  rolicni  Petroleum  uud 
siliiitliclicu  daraus  zu  ncwiiinciKlcu  I'ldduktcu,  ins- 
besondere  von  ratHnicrteui  I'etroU'uni,  sowie  der 
Handel  mit  Waren  ilhnlicher  Art, 

N 


178  INDUSTRIAL   COMBLNATIONS. 

5.  der  Betrieb  von  Kommissionsgescliaften  jeder 
Art, 

6.  der  Betrieb  von  Geschaften,  sowie  die  Beteiligiing 
an  Unternehmungen,  welche  nach  dem  Ermessen  von 
Vorstand  nnd  Anf sichtsrat  mit  dem  Unternehmen  in 
Verbindung  stehen  oder  den  Zwecken  desselben  forder- 
lich  sind. 

§   2. 

Die  Aktiengesellschaft  hat  ihren  Sitz  in  Bremen. 
Die  Errichtung  von  Zweigniederlassungen  ist  zulassig. 
Die  Dauer  des  Unternelimens  ist  unbestimmt. 


§  3. 

Laut  Vertrag  vom  22.  Februar  1890  erwirbt  die 
Aktiengesellschaft  von  den  Herren  Wilhelm  A.  Eiede- 
mann  in  Geestemlinde,  Eranz  Ernst  Schtitte  und  Carl 
Schiltte  in  Bremen  die  in  den,  dem  Vertrage  angefiigten 
Specifikationen  aufgeflihrten  Aktiven  zn  dem  Gesamt- 
preise  von  5,000,000  Mark,  der  dnrch  Barzahlung  in 
Holie  von  3,000,000  Mark  nnd  dnrch  tJbergabe  von 
Aktien  der  Gesellschaft  im  Nominalbetrage  von 
2,000,000  Mark,  welche  fllr  voU  eingezahlt  gelten, 
beglichen  wird. 

§  4. 

Alle  namens  der  Gesellschaft  zu  erlassenden  Be- 
kanntmachungen  erfolgen  dnrch  einmalige  Veroffent- 
lichung  im  Dentschen  Eeichsanzeiger. 


APPENDIX  in.  179 

n.  GRUNDKAPITAL,  AKTIEN. 

§   5. 

Das  Grunclkapital  der  Gesellschaft  betragt  9,000,000 
Mark ;  eingeteilt  in  9000  auf  den  Namen  lauteiide 
Aktien  a  1000  Mark. 

Die  Aktien  werden  luit  genauer  Bezeiclmung  des 
Inhabers  nach  Namen,  AVolinort  und  Stand  in  das 
Aktienbuch  der  Gesellscliaft  eingetragen.  Iin  Ver- 
lialtnis  zu  der  Gesellschaft  sind  nur  diejeuigen  Inhaber 
von  Aktien  zur  Ausubung  ihrer  Eeclite  legitiniiert, 
welehe  im  Aktienbuche  verzeiclmet  sind.  1st  eine  auf 
den  Nanien  lautende  Aktie  aiif  einen  anderen  tiber- 
tragen,  so  ist  dies  unter  Yorlegimg  der  Aktie  und  des 
Nacliweises  des  tjberganges  bei  der  Gesellscliaft  anzu- 
nielden  und  im  Aktienbuche  einzutragen. 

Vor  dem  31.  Marz  1905  ist  eine  Ubertragung  von 
Aktien  der  Gesellschaft  gegenliber  nur  reclitswirksani, 
wenn  die  Ubertragung  von  dem  Vorstande  und  deni 
Aufsichtsrate  genehmigt  ist. 

§   G. 

Soweit  die  Aktien  niolit  laut  §  3  dieses  Statutes  den 
Herren  Wilhelm  A.  Kiedemann,  Franz  Ernst  Schi'itte 
und  Carl  Schi'itte  als  Gegenleistung  fi'ir  i'lbertragene 
Werte  iibergeben  sind,  sind  die  Aktien  von  den  (iriin- 
dern  unter  Einzahlung  von  '2~)  %  des  Nennwertes  i'lber- 
nommen.  Die  Einzahlung  des  Kestbetrages  erfolgt  an 
den  vom  Vorstande  festzusetzenden  Terminen. 


180  INDUSTRIAL   COMBINATIONS. 

§   7. 
Die  Aktien  werden  unter  fortlaiifenden  Rummern 
ausgefertigt  iind  niit  der   faksimilierten   oder   eigen- 
handigen  Unterschrift  eines  Mitgliedes  des  Vorstandes 
iind  eines  Mitgliedes  des  Aufsiclitsrates  versehen. 


Die  Aiiszalilung  der  Dividende  erfolgt  gegen  Aus- 
handigung  des  Dividendenscheines.  Vorstand  imd 
Aufsiclistrat  sind  jedoch  berechtigt,  falls  der  Yerlust 
eines  Dividendenscheines  ihnen  glaubhaft  gemacht 
wird,  die  Auszahlung  an  denjenigen  vorzunehmen,  auf 
dessen  Nanien  die  Aktie  in  das  Aktienbncli  der  Gesell- 
schaft  eingetragen  ist ;  mit  dieser  Auszahlung  erloschen 
alle  Rechte  aus  dem  Dividendenschein. 

Der  Vorstand  ist  berechtigt,  neue  Serien  von  Divi- 
dendenseheinen  an  denjenigen  auszugeben,  auf  dessen 
ISTamen  die  Aktie  eingetragen  ist,  wenn  der  zur  Erhe- 
bung  bestimmte  Talon  nicht  bis  zum  Falligkeitstermine 
des  zweiten  der  Dividendenscheine  der  neuen  Serie 
eingereicht  worden  ist;  mit  dieser  Ausgabe  verliert 
der  nicht  eingereichte  Talon  seine  Giiltigkeit. 

Ein  offentliches  Angebot  und  eine  Kraftloserklarung 
von  Dividendenscheinen  und  Talons,  abgesondert  von 
den  Aktien,  zu  denen  sie  gehoren,  Sndet  nicht  statt, 

m.  OKGANE   DER   GESELLSCHAFT. 
§    9. 
Organe  der  Gesellschaf t  sind : 
a.   der  Vorstand, 
h.    der  Aufsichtsrat, 
c.    die  Generalversammlung. 


APrENDIX   III.  181 

a.   Der  Vokstand. 
§  10. 

Den  ersten  Vorstand  bilden  die  Herren  Wilhelm  A. 
Riedeiiiann,  Franz  Ernst  Schi'itte  und  Carl  Sehiitte. 
Die  Generalversammlung  ist  berechtigt,  eine  Erlioliung 
Oder  Verringeriing  der  Zalil  der  Vorstandsmitglieder 
zu  beschliessen. 

Die  Neuwahl  von  Vorstandsmitgliedern  erfolgt  auf 
Vorsclilag  des  Vorstandes  durch  die  Generalversamin- 
lung;  sind  keine  Vorstandsmitglieder  im  Anite,  so 
erfolgt  die  Neuwahl  auf  Vorsclilag  des  Aufsielitsrates. 

Eine  Vertretung  von  Vorstandsmitgliedern  durch 
Mitglieder  des  Aufsielitsrates  findet  niclit  statt. 

Die  Bestellung  eines  Vorstandsmitgliedes  ist  nur 
durch  Beschluss  der  Generalversammlung  wider- 
rullich. 

§  11. 

Willenserkliirungen  des  Vorstandes  bodurfen,  um 
fiir  die  (iesellschaft  verbindlich  zu  sein,  dor  Mitwirk- 
ung  zweier  Vorstandsmitglieder,  wenn  es  sich  handelt 
um  Ankauf,  Vor])t;in(lung  oder  Verausserung  von 
(Jrundstiickcn  und  Schitt'cii,  iiiii  Vertriigi',  Avclche 
die  Gcscllscliaft  auf  langer  als  ein  Jahr  veri)iiichtcn. 
um  Aufnahme  von  Anliehen,  um  Errichtung  oder 
Auflosung  von  Zweigniederlassungen,  um  Beteiligung 
an  dritten  Unternehmungen  oder  den  Erwerb  solclu  r. 
um  r.e.stellungen  von  rrokuristcn  und  (Jeneralbcvitll- 
milchtigtri)  ;  ill  alien  anderen  Fiillen  sind  Willcnsei'- 
klarungeii  des  \'orstandes  fiir  die  Gesellseluift  verbiud- 


182  INDUSTRIAL   COMBINATIONS. 

licli,   wenn   dieselben  von   einem  Vorstandsmitgliede 
abgegeben  werden. 

§  12. 

Der  Vorstand  bedarf  der  Genehmigiing  des  Auf- 
sichtsrates : 

1.  zum  Erwerb,  ziir  Verpfandung  imd  Verausserung 
vou  Grundstlicken  imd  Schiffen, 

2.  zu  Neubauten  und  bauliclien  tind  mascliinellen 
Anderungen,  sofern  die  Kosten  einen  Betrag  von 
100,000  Mark  iibersteigen, 

3.  zur  Aixfiiahme  vou  Anliehen, 

4.  zur  Erriclituug  oder  Auflosuug  vou  Zweignieder- 
lassimgen, 

5.  zur  Bestellung  eines  Prokuristen, 

6.  zur  Beteiligaing  an  dritten  Unternehmen. 

Der  Vorstand  soil  das  Eeclit  haben,  mit  Geneh- 
migung  des  Aufsichtsrats  Geuussscheiue  auszugeben, 
welche  zu  einem  Anteil  an  dem  Gewinn  und  dem 
Vermogen  der  Gesellschaft  in  Gemassbeit  naberer 
Bestimmungen  bereclitigen  solleu,  welche  von  dem 
Vorstand  und  dem  Aufsichstrat  f estzustellen  sind. 

b.  Der  Aufsichtskat. 

§  13. 

Der  Auf  sicbtsrat  bestebt  nacb  naherer  Bestimmung 
der  Generalversammlung  ?ais  drei  bis  sieben  Mitglied- 
ern,  welcbe  von  der  Generalversammlung  in  gebeimer 
Abstimmung  mit  absoluter  Majoritat  gewahlt  werden. 
Bei   Stimmensrleicbbeit    entscheidet   das   Los.      Eine 


APPENDIX  III.  183 

Walil  durch  Acclamation  ist.  ziilassig,  wenn  in  der 
Generalversammlung  kein  AViderspruch  dagegen  er- 
hoben  wird. 

§  14. 

Der  zuerst  gewalilte  Aufsiclitsrat  verbleibt  bis  zinn 
Ablaufe  des  zweiten,  am  81.  Dezember  1891  endigendeu 
Gescliilftsjalires  im  Amte.  Fiir  die  Folgczeit  werden 
die  Mitglieder  alljalirlich  ge'svalilt,  und  cudcl  ilire 
Amtsdauer  in  der  naclisten  ordentlielien  (ieneralver- 
sammhing.  Die  Wiederwalil  ausgescliiedenei-  ]\Iit- 
glieder  ist  statthaft. 

Sclieidet  ein  IVIitglied  willirend  seiner  Amtsdauer 
aus,  so  hat  innerhalb  drei  INIonaten  eine  Neuwahl  zu 
erfolgen,  wenn  oline  dieselbe  der  Aufsiclitsrat  aus 
weniger  als  drei  Mitgliedern  bestehen  wilrde. 

§  15.    • 

Der  Aufsiclitsrat  wilhlt  alljabrlich  aus  seiner  Mitte 
mit  relativer  Majoritat  einen  Vorsitzer  und  einen 
stellvertretenden  Vorsitzer.  Kei  Stimmengleicldieit 
entsclieidet  das  Los. 

§  16. 

Die  Sitzungen  des  Aufsiclitsrates  finden  in  Bremen 
oder  in  New- York  statt.  Zu  den  Sitzungen  werden 
die  IMitglicder  vom  Vorsitzer,  bezw.  dessen  .St('llv(n'- 
treter  scliriftlicli  berufen,  so  oft  es  dieseni  erforderlidi 
erscheint.  Er  ist  zu  der  sofortigen  Berufung  verpflieh- 
tet,  wenn  die  iMelirzahl  der  Mitglieder  oder  der  Vor- 
stand  scliriftlicli  die  Berufung  beantragen. 


184  INDUSTRIAL   COMBINATIONS. 

Der  Vorsitzer  ist  berechtigt,  Beschlussfassungen  des 
Aufsichtsrat  auf  schriftlichem  Wege  herbeizuflihren, 
falls  niclit  von  seiteu  eines  Mitgliedes  des  Aufsichts- 
rates  Widerspruch  dagegen  erhoben  wird. 

Ziir  Gllltigkeit  eines  auf  diese  Weise  herbeigefuhrten 
Besehlusses  ist  Zustimmnng  der  Mehrheit  der  Mit- 
glieder  des  Aufsichtsrates  erforderlich. 

§  17. 

Der  Aufsichtsrat  ist  bescblussfaliig,  falls  wenigstens 
drei  seiner  Mitglieder  anwesend  sind.  Den  Vorsitz  in 
den  Versammlungen  des  Aufsichtsrats  flilirt  der  Vor- 
sitzer oder  dessen  Stellvertreter,  oder,  falls  beide  am 
Erscheinen  verliindert  sind,  ein  von  einem  derselben 
beauftragtes  Mitglied  des  Aufsichtsrats. 

Die  Beschllisse  Averden  niit  absoluter  Stimmenmehr- 
heit  gefasst,  bei  Stimmengleichheit  entscheidet  die 
Stimme  des  Vorsitzenden  der  betreffenden  Versamm- 
liing. 

Die  gefassten  Beschllisse  sind  in  ein  Protokollbuch 
einzutragen  und  von  dem  Vorsitzenden  der  betreffenden 
Versammlung  zu  unterzeichnen. 

§  18. 

Ausfertigungen  und  Bekanntmachungen  des  Auf- 
sichtsrats werden  namens  desselben  von  dem  Vorsitzer 
oder  dessen  Stellvertreter  erlassen. 

§  19. 

Der  Aufsichtsrat  ist  berechtigt,  die  Wahrnehmungeu 
ihm  obliegender  Geschafte,  insbesondere  die  Einsicht 


APPENDIX   III.  185 

der  Biicher  xind  Schriften  der  Gesellschaft  eineiii  oder 
mehreren  seiner  Mitglieder  dauernd  oder  voriibergc- 
hend  zii  iibertragen,  soweit  eine  derartige  Ubertragung 
gesetzlich  zulassig  ist. 

§  20. 

Die  Mitglieder  des  Aufsichtsrats  erhalten  fiir  ilirc 
Tlultigkeit  keiiie  Yergtitung,  jedoch  Ersatz  barer  Aus- 
lageu. 

c.   Die  Generalversammlung. 

§  21. 

Die  Generalversammlung  werden  von  deni  Vorstande 
berufen  und  tinden  in  Bremen  statt. 

Eine  Versammlung  ist  ordnungsmassig  berufen, 
Avenn  die  Einladung  zu  derselben  wenigstens  einen  Mo- 
nat  vor  dem  fiir  die  Generalversammlung  bestimmten 
Tage  im  Deutschen  Reichsanzeiger  veroffentlicht  ist, 
und  wenn  die  Mitglieder  des  Aufsichtsrates  zu  dieser 
Versammlung  geladen  sind.  Zum  nachweis,  dass  ein 
Mitglied  des  Aufsichtsrates  ordnungsmassig  geladen 
ist,  geniigt  die  von  der  Postanstalt  erteilte  Bescheini- 
gung,  dass  wenigstens  einen  Monat  vor  Abhaltung  der 
Generalversammlung  ein  eingeschriebener  Brief  an  das 
betreifende  Mitglied  des  Aufsichtsrats  abgesandt  ist. 

§  22. 

Jedc  in  das  Aktienbuch  der  Gesellschaft  eingetragene 
Aktie  gewahrt  eine  Stimme ;  die  Vertretung  abwesen- 
der  Aktionare  ist  nur  durcli  scliriftliclic  Vollmaclit 
zulassiij. 


186  INDUSTRIAL   COMBINATIONS. 

Oline  besondere  Vollmacht  konnen  vertreten  werden : 
Handlungshauser  oder  Kommanditgesellsehaf ten  durch 
einen  Geschaftsinhaber  oder  Prokuristen,  Ehefrauen 
dureli  ihre  Ehemanner,  Witwen  durch  einen  ihrer 
gross jahrigen  Sohne,  Minder jahrige  oder  sonst  Bevor- 
mnndete  durch  einen  ihrer  Vormlinder  oder  Pfleger, 
Korporationem,  Institute  und  Aktiengesellschaften 
durch  einen  ihrer  gesetzlichen  Vertreter. 

§  23. 

Die  ordentlichen  Generalversammlungen  finden  all- 
jahrlich  in  der  ersten  Halfte  des  Geschaftsjahres  statt. 

Ausserordentliche  Generalversammlungen  werden 
berufen,  wenn  der  Aufsichtsrat  oder  der  Vorstand  es 
fur  erf orderlich  erachtet. 

§  24. 

Ein  Mitglied  des  Vorstandes  oder  des  Aufsichtsrats 
filhrt  den  Vorsitz.  tjber  die  Versanimlung  ist  ein 
gerichtliches  oder  notarielles  Protokoll  aufzunehmen. 

§  25. 

Gegenstande  der  ordentlichen  Generalversammlung 
sind: 

1.  Entgegennahme  der  Rechnung  und  des  Berichts 
des  letzten  Geschaftsjahres. 

2.  Beschlussfassung  ilber  die  Gewinnverteilung. 

3.  Wahlen  fiir  den  Aufsichtsrat. 

4.  Beschlussfassung  liber  etwa  sonst  ges'tellte  An- 
tragre. 


APPENDIX   III.  187 

Die  Generalversammlimg  ist  berechtigt,  zur  Prufung 
der  Bilanz-  und  der  Gewinn-  und  Verlustreclmung 
Revisoren  zu  ernennen.  Die  Wahl  erfolgt  in  gelieimer 
Abstimmuug  mit  absoluter  Stimmenmehrheit. 

§  26. 

Beschliisse  der  Generalversammlung  werdeu  mit 
absoluter  Stimmenmehrheit  gefasst ;  uber  die  nach- 
stehenden  Gegenstande  kann  ein  Bescliluss  nur  gefasst 
werdeii,  -wcniii  der  Aiitrag  vom  Auf'siclitsrate  gestcllt 
ist,  und  fill-  die  Aimahiue  desselben  dreiviertel  des  in 
der  Generalversammlung  vertretenen  Gnnidkapitals 
sich  erklart : 

1.  Abanderung  und  Ergilnzung  des  Statiits ; 

2.  Vergrosserung  des  Grundkapitals  bezw.  eine 
Herabsetzung  oder  teilweise  Zuri'ickzalilung  desselben; 

3.  Vereinigung  der  Gesellscliaft  mit  einer  anderen 
oder  Auflosung  derselben. 

Ausserdem  ist  eine  Mehrheit  von  dreiviertel  8timmen 
des  in  einer  Generalversannulung  vertretenen  Aktien- 
Kapitals  in  alien  Fallen  erforderlich,  avo  das  Gesetz 
sie  verlangt. 

§  27. 

Jahresrechnung,  Bilanz  und  die  Vorschlage  zur  Ge- 
winnverteilung  gelten  als  genehmigt,  Avenn  die  Gen- 
eralversammlung nicht  das  Geirenteil  beschliesst. 


188  INDUSTRIAL  COMBINATIONS. 


IV.    GESCHAFTSJAHR,   BILANZ,    REINGEWINN- 
VERTEILUNG. 

§  28. 

Das  Geschaftsjahr  ist  das  Kalenderjahr,  das  erste 
Geschaftsjahr  lauft  bis  zuni  31.  Dezember  1890. 

Auf  den  31.  Dezember  eines  jeden  Jahres  muss  vom 
Vorstaiide  die  Recliuimg  abgeschlossen  und  sodaiin 
biunen  drei  Monateu  eine  Bilanz  nebst  Inventar,  eine 
Gewinn-  und  Verlustreclinung,  sowie  ein  den  Yer- 
mogensstand  und  die  Verhaltnisse  der  Gesellscliaft 
darlegender  Bericht  dem  Aufsichtsrate  zur  Genehmi- 
gung  eingereiclit  v.'erden. 

Vorstand  und  Aufsiclitsrat  sind  berechtigt,  die  Yor- 
nalime  ausserordentlicher  Abschreibungen,  sowie  die 
Bildung  von  Specialreserven  gemeinschaftlich  zu  be- 
schliessen. 

§  29. 

Die  Vorlagen  sind  von  dem  Yorstande  nebst  den 
Bemerkiingen  des  Aufsichtsrats  in  dem  Geschaftslokale 
der  Gesellscliaft  auszulegen,  und  werden  sodann  der 
Generalversammlung  vorgelegt. 

§  30. 

Der  bilanzmassige  Eeingewinn  wird  wie  folgt 
verteilt : 

1.  5  %  an  den  gesetzliclien  Reservefonds,  bis 
derselbe  die  gesetzliche  Hohe  erreicht  hat, 


APPENDIX  in.  189 

2.  der  Eest  soil,  insofern  der  Vorstand  iind  der 
Aufsichtsrat  niclit  dessen  Verwendung  zu  besouderen 
Reserven  beschliessen,  als  Dividende  imter  den  Aktio- 
iiflren  imd  Inhabern  von  Genussscheinen  zur  Verteilung 
gelangen. 

V.   UBERGANGSBESTIMMUNGEN. 

§  31. 

Der  Vorstand  ist  ermachtigt,  mit  Zustimmiing  des 
Ant'siclitsrats  alle  Andcningen  und  Zusiltze  der  Sta- 
tntcn  mit  verbindlicher  Kraft  i'ur  alle  Aktionare  zu 
beschliessen,  welche  zuni  Zwecke  der  Eintragung  der 
Gesellschaft  in  das  Firnienregister  voiu  liegisterrichter 
vcrlangt  werdeu  sollteu. 


190  INDUSTRIAL   COMBINATIONS. 


APPENDIX   IV. 

UKITED   STATES   ANTI-TEUST   LAW. 

AN  ACT  TO  Protect  Trade  and  Commerce  against 
Unlawful  Restraints  and  Monopolies. 

Be  it  enacted  by  the  Senate  and  House  of  Represen- 
tatives of  the  United  States  of  America  in  Congress 
assembled, 

Sec.  1.  Every  contract,  combination  in  the  form  of 
trust  or  otherwise,  or  conspiracy,  in  restraint  of  trade 
or  commerce  among  the  several  States,  or  with  foreign 
nations,  is  hereby  declared  to  be  illegal.  Every  per- 
son who  shall  make  any  such  contract  or  engage  in 
any  such  combination  or  conspiracy,  shall  be  deemed 
guilty  of  a  misdemeanour,  and,  on  conviction  thereof, 
shall  be  punished  by  fine  not  exceeding  five  thousand 
dollars,  or  by  imprisonment  not  exceeding  one  year,  or 
by  both  said  punishments,  in  the  discretion  of  the 
court. 

Sec.  2.  Every  person  who  shall  monopolize,  or 
attempt  to  monopolize,  or  combine  or  conspire  with 
any  other  person  or  persons,  to  monopolize  any  part 
of  the  trade  or  commerce  among  the  several  States,  or 
with  foreign  nations,  shall  be  deemed  guilty  of  a  mis- 


APPENDIX  IV.  191 

demeanour,  and,  on  conviction  thereof,  shall  be  pun- 
ished by  fine  not  exceeding  five  thousand  dollars,  or 
l)y  imprisonment  not  exceeding  one  year,  or  by  both 
said  punishments,  in  the  discretion  of  the  court. 

Sec.  3.  Every  contract,  combination  in  form  of  trust 
or  otherwise,  or  conspiracy,  in  restraint  of  trade  or 
commerce  in  any  Territory  of  the  United  States  or  of 
the  District  of  Columbia,  or  in  restraint  of  trade 
or  commerce  between  any  sucli  Territory  and  another, 
or  between  any  such  Territory  or  Territories  and  any 
State  or  States  or  the  District  of  Coluinbia,  or  with 
foreign  nations,  or  between  the  District  of  Columbia 
and  any  State  or  States  or  foreign  nations,  is  hereby 
declared  illegal.  Every  person  who  shall  make  any 
sucli  contract  or  engage  in  any  such  combination  or 
conspiracy,  shall  be  deemed  guilty  of  a  misdemeanour, 
and,  on  conviction  thereof,  shall  be  punished  by  fine 
not  exceeding  five  thousand  dollars,  or  by  imprison- 
ment not  exceeding  one  year,  or  by  both  said  punish- 
ments, in  the  discretion  of  the  court. 

Sec.  4.  The  several  circiiit  courts  of  the  United 
States  are  hereby  invested  with  jurisdiction  to  pre- 
vent and  restrain  violations  of  this  act ;  and  it  shall 
be  the  duty  of  the  sevei'al  district  attorneys  of  the 
United  States,  in  their  respective  districts,  under  the 
direction  of  the  Attorney-General,  to  institute  proceed- 
ings in  ccjuity  to  i)revent  and  restrain  such  violations. 
Such  proceedings  may  be  by  way  of  petition  setting 
fortli  the  case  and  praying  that  such  violation  shall 
be  enjoined  or  otherwise  prohibited.  When  the  par- 
ties complained  of  shall  have  been  duly  notified  of 


192  INDUSTRIAL   COMBINATIONS. 

such  petition  the  court  shall  proceed,  as  soon  as  may 
be,  to  the  hearing  and  determination  of  the  case ;  and 
pending  such  petition  and  before  final  decree,  the  court 
may  at  any  time  make  such  temporary  restraining 
order  or  prohibition  as  shall  be  deemed  just  in  the 
premises. 

Sec.  5.  Whenever  it  shall  appear  to  the  court  before 
which  any  proceeding  under  section  four  of  this  act 
may  be  pending,  that  the  ends  of  justice  require  tluit 
other  parties  should  be  brought  before  the  court,  the 
court  may  cause  them  to  be  summoned,  whether  they 
reside  in  the  district  in  which  the  court  is  held  or  not ; 
and  subpoenas  to  that  end  may  be  served  in  any  dis- 
trict by  the  marshal  thereof. 

Sec.  6.  Any  property  owned  under  any  contract  or 
by  any  combination,  or  pursuant  to  any  conspiracy  (and 
being  the  subject  thereof)  mentioned  in  section  one 
of  this  act,  and  being  in  the  course  of  transportation 
from  one  State  to  another,  or  to  a  foreign  country, 
shall  be  forfeited  to  the  United  States,  and  may  be 
seized  and  condemned  by  like  proceedings  as  those 
provided  by  law  for  the  forfeiture,  seizure,  and  con- 
demnation of  property  imported  into  the  United 
States  contrary  to  law. 

Sec.  7.  Any  person  who  shall  be  injured  in  his 
business  or  property  by  any  other  person  or  corpora- 
tion by  reason  of  anything  forbidden  or  declared  to 
be  unlawful  by  this  act,  may  sue  therefor  in  any  cir- 
cuit court  of  the  United  States  in  the  district  in  which 
the  defendant  resides  or  is  found,  without  respect  to 
the  amount  in  controversy,  and  shall   recover  three 


APPENDIX    IV.  193 

fold  the  damages  by  him  sustained,  and  the  costs  of 
suit,  including  a  reasonable  attorney's  fee. 

Skc.  8.  That  the  word  "  person,"  or  ''  persons," 
wherever  used  in  this  act  shall  be  deemed  to  include 
corporations  and  associations  existing  under  or  author- 
ized by  the  laws  of  either  the  United  States,  the  laws 
of  any  of  the  Territories,  the  laws  of  any  State,  or  the 
laws  of  any  foreign  country. 

Approved  July  2,  ISliO. 


194  INDUSTRIAL   COMBINATIONS. 


APPENDIX   V. 

ILLINOIS   ANTI-TRUST  LAW. 

POOLS,    TRUSTS,    AND   COMBINES   PROHIBITED. 

AN  ACT  TO  Provide  for  the  Punishment  of  Persons, 
Copartnerships  or  Corporations  Forming  Pools,  Trusts 
and  compines,  and  mode  of  procedure  and  rules  of 
Evidence  in  Such  Cases. 

Sec.  1.  Be  it  enacted  by  the  People  of  the  State  of 
Illinois,  represented  in  the  General  Assembly:  If  any 
corporation  organized  under  the  laws  of  this  or  any- 
other  State  or  country,  for  transacting  or  conducting 
any  kind  of  business  in  this  State,  or  any  partnersliip 
or  individual  or  other  association  of  persons  whoso- 
ever, shall  create,  enter  into,  become  a  member  of  or  a 
party  to  any  pool,  trust,  agreement,  combination,  con- 
federation or  understanding  with  any  other  Corpora- 
tion, partnership,  individual,  or  any  other  person,  or 
association  of  persons,  to  regulate  or  fix  the  price  of 
any  article  of  merchandise  or  commodity,  or  shall 
enter  into,  become  a  member  of  or  a  party  to  any 
pool,  agreement,  contract,  combination  or  confedera- 
tion, to  fix  or  limit  the  amount  or  quantity  of  any  arti- 
cle, commodity  or  merchandise  to  be  manufactured, 
mined,  produced  or  sold  in  this  State,  such  corporar 


APPENDIX  V.  195 

tion,  partnership  or  individual  or  other  association  of 
persons  shall  be  deemed  and  adjudged  guilty  of  a 
conspiracy  to  defraud,  and  be  subject  to  indictment 
and  punishment  as  provided  in  this  act. 

§  2.  It  shall  not  be  lawful  for  any  corporation  to 
issue  or  to  own  trust  certificates,  or  for  any  corpora- 
tion, agent,  officer  or  employees,  or  the  directors  or 
stockholders  of  any  corporation  to  enter  into  any  com- 
bination, contract  or  agreement  with  any  person  or 
persons,  corporation  or  corporations,  or  with  any  stock- 
holder or  director  thereof,  the  purpose  and  effect  of 
which  combination,  contract  or  agreement  shall  be  to 
])\sLce  the  management  or  control  of  such  combination 
or  combinations,  or  the  manufactured  product  thereof, 
in  the  hands  of  any  trustee  or  trustees,  with  the  intent 
to  limit  or  fix  the  price  or  lessen  the  production  and 
sale  of  an  article  of  commerce,  use  or  consumption,  or 
to  prevent,  restrict,  or  diminish  the  manufacture  or 
output  of  any  such  article. 

§  3.  If  a  corporation  or  a  com])aiiy,  firm  or  associa- 
tion shall  be  found  guilty  of  a  vit)lation  of  this  act,  it 
shall  be  punished  l»v  a  fine  in  any  sum  not  less  than 
five  hundred  dollars  (■1{<.")()())  nor  more  than  two  thou- 
sand dollars  (.1^2000),  for  the  first  offence;  and  lor  the 
second  offence  not  less  than  two  thousand  dollars 
(|!2000),  nor  more  than  five  thousand  dollars  (.*r)()()()), 
and  for  the  third  offence  not  less  than  five  thousand 
dollars  ($o()()(»).  nor  more  than  ten  thousand  dollars 
($10,000);  and  foi- cvci y  subsequent  offence  and  con- 
viction tliereof,  shall  be  lial)lr  to  a  i\uo  of  tiftccn 
thousand  dollnrs  r.^iin.OOO") :   Provided,  that  in  all  cases 


196  INDUSTRIAL   COMBINATIONS. 

under  tins  act  either  party  shall  have  the  right  of 
trial  by  jury. 

§  4.  Any  president,  manager,  director  or  other  of- 
ficer or  agent  or  receiver  of  any  corporation,  company, 
firm  or  association,  or  any  member  of  any  company, 
firm  or  association,  or  any  individual  found  guilty  of 
a  violation  of  the  first  section  of  this  act,  may  be  pun- 
ished by  a  fine  of  not  less  than  two  hundred  dollars 
($200),  nor  to  exceed  one  thousand  dollars  (.$1000), 
or  be  punished  by  confinement  in  the  county  jail  not 
to  exceed  one  year,  or  both,  in  the  discretion  of  the 
court  before  which  such  conviction  may  be  had. 

§  5.  Any  contract  or  agreement  in  violation  of  any 
provision  of  the  preceding  sections  of  this  act,  shall 
be  absolutely  void. 

§  G.  Any  purchaser  of  any  article  or  commodity 
from  any  individual,  company  or  corporation  transact- 
ing business  contrary  to  any  provision  of  the  preceding 
sections  of  this  act,  shall  not  be  liable  for  the  price  or 
payment  of  such  article  or  commodity,  and  may  plead 
this  act  as  a  defence  in  any  suit  for  such  price  or  pay- 
ment. 

§  7.  The  fines  hereinbefore  provided  for  may  Le 
recovered  in  an  action  of  debt,  in  the  name  of  the 
People  of  the  State  of  Illinois.  If,  upon  the  trial  of 
any  cause  instituted  under  this  act  to  recover  the 
penalties  as  provided  for  in  section  three,  the  jury 
shall  find  for  the  people,  and  that  the  defendant  has 
been  before  convicted  of  a  violation  of  the  provisions 
of  this  act,  they  shall  return  such  finding  with  their 
verdict,  stating  the  number  of  times  they  find  defend- 


APPENDIX   V.  197 

ant  so  convicted,  and  .sliall  assess  and  retnrn  with 
their  verdict  the  amount  of  tlie  fine  to  be  ini})osed 
upon  the  defendant  in  accordance  with  said  section 
three:  Provided,  that  in  all  cases  under  the  })rovisions 
of  this  act,  a  preponderance  of  evidence  in  favoiii'  of 
the  people  shall  be  sutficient  to  authoi-ize  a  verdict 
and  judgment  for  the  people, 

§  S.  It  shall  be  the  duty  of  the  i)roseciiting  attor- 
neys in  their  respective  jurisdictions,  and  the  Attorney 
(General,  to  enforce  the  foregoing  provisions  of  this 
act,  and  any  prosecuting  attorney  of  any  county,  secur- 
ing a  conviction  under  the  provisions  of  this  act,  shall 
lie  entitled  to  such  fee  or  salary  as  by  law  he  is  al- 
lowed for  such  prosecution.  When  there  is  a  convic- 
tion under  this  act,  the  informer  shall  be  entitled  to 
one-fifth  of  the  fine  recovered,  which  shall  be  jiaid 
him  when  the  same  is  collected.  All  fines  recovered 
under  tlu^  i)rovisions  of  tliis  act  shall  l)e  ])aid  into  the 
county  treasury  of  the  county  in  which  the  suit  is 
tried,  by  the  person  collecting  the  same,  in  the  manner 
now  ])rovided  by  law,  to  be  used  for  county  })urposes. 

Approvkd  June  11,  1891. 


198  INDUSTRIAL  COMBINATIONS. 


APPENDIX  VI. 

AMENDMENT   TO   THE   ILLINOIS  ANTI- 
TRUST  LAW. 

ENFORCING   TRUST   LAWS. 

AN   ACT   TO    AMEND    AN    ACT    ENTITLED  "  An    AcT    TO    PROVIDE 

FOR  THE  Punishment  of  Persons,  Copartnerships  or 
Corporations  forming  Pools,  Trusts  and  Combines, 
AND  Mode  of  Procedure  and  Rules  of  Evidence  in 
Such  Cases,"  approved  June  11,  1891,  and  in  Force 
July  1,  1891,  be  and  the  Same  is  hereby  amended  by 
adding   Two   New   Sections  —  7a   and   7b,  respectively- 

and  making   an   appropriation  for    the  purpose  of 

carrying  INTO  Effect  this  Act. 

Section  1.  Be  it  enacted  hy  the  jjeople  of  the  State 
of  Illinois,  represented  in  the  General  AssembJj/ :  That 
an  act  entitled  "  An  act  to  provide  for  the  punishment 
of  persons,  copartnerships  or  corporations  forming 
pools,  trusts  and  combines,  and  mode  of  procedure 
and  rules  of  evidence  in  such  cases,"  approved  June 
11,  1891,  and  in  force  July  1,  1891,  be  and  the  same 
is  hereby  amended  by  two  new  sections,  as  follows :  — 

Sec.  Ta.  It  shall  be  the  duty  of  the  Secretary  of 
State,  on  or  about  the  first  day  of  September  of  each 
year,  to  address  to  the  president,  secretary,  or  treas- 
urer of  each  incorporated  company  doing  business  in 
this  State,  whose  post  office  address  is  known  or  may 


APPENDIX  VI.  199 

be  ascertained,  a  letter  of  inquiry  as  to  whether  the 
said  corporation  has  all  or  any  part  of  its  business  or 
interest  in  or  with  any  trust  combination  or  association 
of  persons  or  stockholders,  as  named  in  the  preceding 
provisions  of  this  act,  and  to  require  an  answer,  under 
oath,  of  the  president,  secretary  or  treasurer,  or  any 
director  of  said  company.  A  form  of  affidavit  shall 
be  enclosed  in  said  letter  of  inqiury,  as  follows :  — 


AFFIDAVIT. 


State  of  Illinois, 
County  of  , 


I,    ,  do  solemnly  swear  that  I  am  the 

(president,  secretary,  treasurer  or  director) 

of  the  corporation  known  and  styled ,  duly 

incorporated  under  the  laws  of  on  the 

of ,  18  — ,  and  now  transacting  or 

conducting  business  in  the  State  of  Illinois,  and  that 
I  am  duly  authorized  to  represent  said  corporation  in 
the  making  of  this  afHdavit ;  and  I  do  further  sol- 
emnly swear  that  tlie  said  ,  known  and 

styled  as  aforesaid,  has  not,  since  the  day  of 

(naming  the  day  uj)on  which  this  act  takes 

effect),  created,  entered  into  or  become  a  member  of 

or  a  party  to,  and  was  not,  on  the   day  of 

,  nor  at  any  day  since  that  date,  and  is  not 

now,  a  member  of  or  a  party  to  any  pool,  trust,  agree- 
ment, combination,  confederation  or  understanding 
with  any  other  corporation,  partnership,  individual  or 
any  other  person  or  association  of  persons,  to  regu- 
late or  fix  the  price  of  any  article  of  merchandise  or 


200  INDUSTRIAL  COMBINATIONS. 

commodity ;  and  that  it  has  not  entered  into  or  become 
a  member  of  or  a  party  to  any  pool,  trust,  agreement, 
contract,  combination  or  confederation  to  fix  or  limit 
the  amount  or  quantity  of  any  article,  commodity  or 
merchandise  to  be  manufactured,  mined,  produced  or 
sold  in  this  State ;  and  that  it  has  not  issued  and  does 
not  own  any  trust  certificates,  and  for  any  corporation, 
officer  or  employee,  or  for  the  directors  or  stockholders 
of  any  corporation,  has  not  entered  into  and  is  not  now 
in  any  combination,  contract  or  agreement  with  any 
person  or  persons,  corporation  or  corporations,  or  with 
any  stockholder  or  director  thereof,  the  purpose  and 
effect  of  which  said  combination,  contract  or  agree- 
ment would  be  to  place  the  management  or  control  of 
such  combination  or  combinations,  or  the  manufactured 
product  thereof,  in  the  hands  of  any  trustee  or  trus- 
tees, with  the  intent  to  limit  or  fix  the  price  or  lessen 
the  production  and  sales  of  any  article  of  commerce, 
use  or  consumption,  or  to  prevent,  restrict  or  dimin- 
ish the  manufacture  or  output  of  any  such  article. 


[^President,  Secretary,  Treasurer  or  Director.'] 

Subscribed  and  sworn  to  before  me,  a 

within  and  for  the  county  of ,  this 

day  of  ,18 

[Seal.]  

And  on  refusal  to  make  oath  in  answer  to  said 
inquiry,  or  on  failure  to  do  so  within  thirty  days  from 
the  mailing  thereof,  the  Secretary  of  State  shall  certify 
that  fact  to  the  Attorney  General,  whose  duty  it  shall 


APPENDIX   VI.  201 

be  to  direct  the  State's  Attorney  of  the  county  wherein 
such  corporation  or  corporations  are  located,  and  it  is 
hereby  made  the  duty  of  the  State's  Attorney,  under 
the  direction  of  the  Attorney  General,  at  the  earliest 
practicable  moment,  in  the  name  of  the  People  of  the 
State  of  Illinois,  and  at  the  relation  of  the  Attorney 
General,  to  proceed  against  such  corporation  for  the 
recovery  of  a  penalty  of  fifty  dollars  for  each  day 
after  such  refusal  to  make  oath,  or  failure  to  make 
said  oath,  within  thirty  days  from  the  mailing  of  said 
notice.  Or  the  Attorney  General  may,  by  any  proper 
proceedings  in  a  court  of  law  or  chancery,  proceed, 
upon  such  failure  or  refusal,  to  forfeit  such  charter  of 
such  incorporated  company  or  association  incorporated 
under  the  general  laws,  or  by  any  sjjecial  law  of  this 
State,  and  to  revoke  the  rights  of  any  foreign  cor})ora- 
tion  located  herein  to  do  business  in  this  State. 

Sec.  7b.  It  shall  be  the  duty  of  the  Secretary  of 
State,  at  any  time,  upon  satisfactory  evidence  that  any 
company  or  association  of  i)ersons,  didy  incori)orated 
under  the  laws  of  this  or  any  other  State,  doing  busi- 
ness in  this  State,  has  entered  into  any  trust,  combi- 
nation or  association  in  violation  of  the  preceding 
section  of  this  act,  to  demand  that  it  shall  nuike  the 
atHdavit,  as  above  set  forth  in  this  act,  as  to  the  con- 
duct of  its  business.  In  case  of  failure  of  compliance 
on  the  ])art  of  the  corporation,  then  the  same  ju-o- 
ccdure  shall  ensiu^  as  is  provided  in  Section  7a  of  this 
act:  Provided,  that  no  corixji-ation.  tirm,  association 
or  individual  shall  be  sultject  to  :iiiy  criminal  i)rosecu- 
tion  by  reason  of  anything  truthfully  disclosed  by  the 


202  INDUSTRIAL   COMBINATIONS. 

affidavit  required  by  this  act,  or  truthfully  disclosed 
in  any  testimony  elicited  in  the  execution  thereof. 

The  Secretary  of  State  is  hereby  authorized  and 
required  to  charge  and  collect  of  each  corporation  a 
fee  of  one  dollar  for  receiving  and  filing  the  affidavit 
herein  provided  for,  to  be  accounted  for  as  other  fees 
received  by  him  :  Provided,  that  corporations  organized 
under  the  Building,  Loan  and  Homestead  Association 
laws  of  the  state  are  excluded  from  the  provisions  of 
this  act. 

Approved  June  20,  1893. 


APPENDIX   Via.  203 


APPENDIX   Via. 

ILLINOIS   LETTER   OF   INQUIRY. 

Office  of 
The  Secretary  of  State 
OF  Illinois. 
Springfield,  III.,  Sept.  1,  1893. 

To  the  President,  Secretary  or  Treasurer  of  

Has  the  corporation  to  which  this  letter  of  inquiry- 
is  addressed,  all  or  any  part  of  its  business  or  interest 
in  or  with  any  trust,  combination  or  association  of 
persons  or  stockholders,  as  named  in  the  provisions  of 
an  act  entitled  "  An  act  to  provide  for  the  punishment 
of  persons,  copartnerships  or  corporations  forming 
pools,  trusts  and  combines,  and  mode  of  procedure  and 
rules  of  evidence  in  such  cases,"  approved  June  11, 
1891,  in  force  July  1, 1891,  a  copy  of  v.hich  is  enclosed  ? 
You  are  required  to  answer  under  oath,  and  a  form 
of  affidavit  is  enclosed  for  that  purpose. 

This  affidavit  should  be  tilled  out,  signed  and  sworn 
to,  and  sent  to  this  office  witlun  thirty  days  afttn-  the 
nuiilint,'  of  tliis  letter.     The  fee  for  liling  the  affidavit 
is  one  dollar,  and  must  be  sent  with  the  affidavit. 
Respectfully, 

H.   II.  HINRICHSEN, 
Seci'etai-y  of  State. 


204 


INDUSTRIAL   COMBINATIONS. 


APPENDIX   VII. 


TEXAS  a:n'ti-trust  law. 


TRUSTS  —  CONSPIRACIES  AGAINST  TRADE. 


Sec. 
1. 
2. 

3. 
4. 


Defines  trusts. 

Corporations  to  forfeit  char- 
ter for  violation  of  this  law. 

Duty  of  attorney-general,  etc. 

Foreign  corporations  violat- 
ing this  act  forbidden  to  do 
business. 

Quo  warranto  proceedings. 

Conspiracy  against  trade. 

Requisites  of  indictment. 

Requisites  of  proof. 

Persons  out  of  the  state  liable 
to  indictment. 


Sec. 

10.  Associations    violating    this 

act  to  forfeit  .$.50  a  day, 
recoverable  on  suit. 

11.  Contracts  or   agreements  in 

violation  hereof  void. 

12.  The  provisions  hereof  cumu- 

lative. 

13.  Exempts  live  stock  and  agri- 

cultui-al  products  in  hands 
of  producers. 

14.  Emergency  clause. 


Chap.  117.  — [S.  H.  Bs.  Nos.  9,  117,  136,  192,  and  .313.]  An  act 
to  define  trusts,  and  to  provide  for  penalties  and  punishment 
of  corporations,  persons,  firms,  and  associations  of  persons 
connected  with  them,  and  to  promote  free  competition  in  the 
state  of  Texas. 

Section  1.  Be  it  enacted  by  the  Legislature  of  the 
State  of  Texas :  That  a  trust  is  a  combination  of  capi- 
tal, skill,  or  acts  by  two  or  more  persons,  firms,  corpo- 
rations, or  associations  of  persons,  or  of  either  two  or 
more  of  them  for  either,  any,  or  all  of  the  follo^\ang 


APPENDIX   VU.  205 

purposes  :  First  —  To  create  or  carry  out  restrictions 
in  trade.  Second  —  To  limit  or  reduce  the  production, 
or  increase  or  reduce  the  price  of  merchandise  or  com- 
modities. Tliird  —  To  prevent  competition  in  manu- 
facture, making,  transportation,  sale,  or  purchase  of 
merchandise,  produce,  or  commodities.  Fourth  —  To 
fix  at  any  standard  or  figure,  whereby  its  price  to  the 
public  shall  be  in  any  manner  controlled  or  establislied, 
any  article  or  commodity  of  merchandise,  produce,  or 
commerce  intended  for  sale,  use,  or  consumption  in 
this  state.  Fifth  —  To  make  or  enter  into,  or  execute 
or  carry  out  any  contract,  obligation,  or  agreement  of 
any  kind  or  description  by  which  they  shall  bind  or 
have  bound  themselves  not  to  sell,  dispose  of,  or 
transport  any  article  or  commodity,  or  article  of  trade, 
use,  merchandise,  coinmerce,  or  consumption  below  a 
common  standard  figure,  or  by  which  they  shall  agree 
in  any  manner  to  keep  the  price  of  such  article,  com- 
modity, or  transportation  at  a  fixed  or  graduated  figure, 
or  by  which  they  shall  in  any  manner  establish  or 
settle  the  price  of  any  article  or  commodity  or  trans- 
l)ortation  between  them  or  themselves  and  others  to 
picchide  a  free  and  unrestricted  competition  among 
themselves  or  others  in  the  sale  or  transportation  of 
any  such  article  or  commodity,  or  by  which  they  shall 
agree  to  pool,  combine,  or  unite  any  interest  they  nuiy 
have  in  connection  with  the  sale  or  trans])ortati()ii  of 
any  such  article  or  commodity  that  its  })rice  miglit  in 
any  manner  be  affected. 

Sec.  2.    That   any   corporation    holding    a    iharter 
under  the  laws  of  the  state  of  Texas  which  shall  vio- 


206  INDUSTRIAL   COMBINATIONS. 

late  any  of  the  provisions  of  this  act  shall  thereby 
forfeit  its  charter  and  franchise,  and  its  corporate 
existence  shall  cease  and  determine. 

Sec.  3.  For  a  violation  of  any  of  the  provisions  of 
this  act  by  any  corporation  mentioned  herein  it  shall 
be  the  duty  of  the  attorney-general  or  district  or  county 
attorney,  or  either  of  them,  upon  his  own  motion,  and 
without  leave  or  order  of  any  court  or  judge,  to  insti- 
tute suit  or  quo  warranto  proceedings  in  Travis  County, 
at  Austin,  or  at  the  county  seat  of  any  county  in  the 
state,  where  such  corporation  exists,  does  business,  or 
may  have  a  domicile,  for  the  forfeiture  of  its  charter 
rights  and  franchise,  and  the  dissolution  of  its  corporate 
existence. 

Sec.  4.  Every  foreign  corporation  violating  any  of 
the  provisions  of  this  act  is  hereby  denied  the  right 
and  prohibited  from  doing  any  business  -ndthin  this 
state,  and  it  shall  be  the  duty  of  the  attorney-general 
to  enforce  this  provision  by  injunction  or  other  proper 
proceedings  in  the  district  court  of  Travis  County,  in 
the  name  of  the  state  of  Texas. 

Sec.  o.  That  the  provisions  of  Chapter  48,  General 
Laws  of  this  state,  approved  July  9, 1879,  to  prescribe 
the  remedy  and  regulate  the  proceedings  by  quo 
warranto,  etc.,  shall,  except  in  so  far  as  they  may 
conflict  herewith,  govern  and  control  the  proceed- 
ings when  instituted  to  forfeit  any  charter  under 
this  act. 

Sec  6.  Any  violation  of  either  or  all  the  provisions 
of  this  act  shall  be  and  is  hereby  declared  a  conspiracy 
against  trade,  and  any  person  who  may  be  or  may 


APPENDIX  vn.  207 

become  engaged  in  any  such  conspiracy  or  take  part 
therein,  or  aid  or  advise  in  its  commission,  or  who 
shall,  as  principal,  manager,  director,  agent,  servant, 
or  employe,  or  in  any  other  capacity,  knowingly  carry 
out  any  of  the  stipulations,  purposes,  prices,  rates,  or 
orders  thereunder  or  in  pursuance  thereof,  shall  be 
punished  by  fine  not  less  than  fifty  dollars  nor  more 
than  five  thousand  dollars,  and  by  imprisonment  in 
the  penitentiary  not  less  than  one  nor  more  than  ten 
years  or  by  either  such  fine  or  imprisonment.  Each 
day  during  a  violation  of  this  provision  shall  constitute 
a  separate  offence. 

Skc.  7.  In  any  indictment  for  an  offence  named  in 
this  act,  it  is  sufficient  to  state  the  purposes  or  effects 
of  the  trust  or  combination,  and  that  the  accused  was 
a  member  of,  acted  with  or  in  pursuance  of  it,  without 
giving  its  name  or  description,  or  how,  when,  or  where 
it  was  created. 

Sec.  8.  In  prosecutions  under  this  act  it  shall  be 
sufficient  to  prove  that  a  trust  or  combination  as 
defined  herein  exists,  and  that  the  defendant  belonged 
to  it  or  acted  for  or  in  connection  with  it,  without 
l)roving  all  the  members  belonging  to  it,  or  proving  or 
producing  any  article  of  agreement  or  any  written 
instrument  on  which  it  may  have  been  based,  or  that 
it  was  evidenced  by  any  written  instrument  at  all. 
The  character  of  the  trust  or  combination  alleged  may 
be  established  by  proof  of  its  general  reijutation  as 
such. 

Sec.  9.  Persons  out  of  the  state  may  commit  and  be 
liable  to  indictment  and  conviction  for  committing  any 


208  INDUSTRIAL   COMBINATIONS. 

of  the  offences  enumerated  in  this  act  which  do  not  in 
their  commission  necessarily  require  a  personal  pres- 
ence in  this  state,  the  object  being  to  reach  and  punish 
all  persons  offending  against  its  provisions  whether 
within  or  without  the  state. 

Sec.  10.  Each  and  every  firm,  person,  corporation, 
or  association  of  persons,  who  shall  in  any  manner 
violate  any  of  the  provisions  of  this  act  shall  for  each 
and  every  day  that  such  violation  shall  be  committed 
or  continued  forfeit  and  pay  the  sum  of  fifty  dollars, 
which  may  be  recovered  in  the  name  of  the  state  of 
Texas  in  any  county  where  the  offence  is  committed  or 
where  either  of  the  offenders  reside,  or  in  Travis 
County,  and  it  shall  be  the  duty  of  the  attorney-general 
or  the  district  or  the  county  attorney  to  prosecute  for 
and  recover  the  same. 

Sec.  11.  That  any  contract  or  agreement  in  vio- 
lation of  the  provisions  of  this  act  shall  be  abso- 
lutely void  and  not  enforceable  either  in  law  or 
equity. 

Sec.  12.  That  the  provisions  hereof  shall  be  held 
cumulative  of  each  other  and  of  all  other  laws  in  any 
way  affecting  them  now  in  force  in  this  state. 

Sec.  13.  The  provisions  of  this  act  shall  not  apply 
to  agricultural  products  or  live  stock  while  in  the 
hands  of  the  producer  or  raiser. 

Sec.  14.  Whereas  the  people  of  this  state  are  with- 
out a  remedy  against  trusts,  therefore  an  emergency 
and  imperative  public  necessity  exists  requiring  that 
the  constitutional  rule  which  requires  that  all  bills 
shall  be  read  on  three  several  days  be  suspended,  and 


APPENDIX  vn.  209 

that  this  act  take  effect  from  and  after  its  passage,  and 
it  is  so  enacted. 

[Note.  —  The  foregoing  act  originated  in  the  House, 
and  passed  the  same  by  a  vote  of  80  yeas,  no  nays ; 
and  passed  the  Senate  by  a  vote  of  26  yeas,  no  nays.] 

Approved,  March  30,  1889. 


210  INDUSTRIAL  COlVIBmATIONS. 


APPENDIX   VIII. 

EEADING   COAL   COMBINE. 

This  agreement,  made  this  thirtieth  day  of  April, 
1892,  by  and  between  the  Lehigh  and  Wilkesbarre 
Coal  Company,  a  corporation  of  Pennsylvania,  herein- 
after called  the  Wilkesbarre  Company,  party  of  the 
first  part,  and  the  Philadelphia  and  Reading  Coal  and 
Iron  Company,  also  a  corporation  of  Pennsylvania, 
hereinafter  called  the  Reading  Company,  party  of  the 
second  part. 

Whereas  the  Wilkesbarre  Company  is  the  owner  or 
lessee,  by  certain  indentures  of  lease,  of  various  lands, 
mines,  and  improvements,  situate  along  or  near  the 
railroad  and  branches  of  the  Lehigh  and  Susquehanna 
Railroad ;  and 

Whereas  the  Port  Reading  Railroad  Company,  as 
lessee  of  the  Central  Railroad  Company  of  New 
Jersey,  has  arranged  with  the  Reading  Company  for 
the  transportation  of  all  anthracite  coal  consigned  by 
the  Reading  Company  over  the  lines  and  branches 
of  the  Lehigh  and  Susquehanna  Railroad  Company 
and  of  the  Central  Railroad  Company  of  New  Jersey, 
for  and  during  the  continuance  of  the  said  lease  to 
the  said  Port  Reading  Railroad  Company  ;  and 

Whereas  it  is  proposed  on  the  part  of  the  Wilkes- 
barre Company  to  sell  and  deliver  the  entire  product 


APPENDIX  vni.  211 

of  its  collieries,  now  operated  or  hereafter  to  be  opened 
and  operated  by  it,  to  the  Heading  Company  to  be 
shipped  to  market  over  the  lines  and  branches  of  the 
Lehigh  and  Susquehanna  Railroad  and  the  Central  Rail- 
road Company  of  New  Jersey,  and  the  Reading  Company 
has  proposed  to  purchase  and  pay  for  the  same  :  — 

Now,  therefore,  this  agreement  witnesseth :  That 
the  said  parties  hereto,  in  consideration  of  the  sum  of 
one  dollar  by  each  of  the  parties  paid  to  the  other. 
and  the  mutual  covenants  and  stipulations  herein  con- 
tained and  written,  have  agreed  and  do  hereby  cove- 
nant agree  to  and  with  each  other  as  follows,  that  is 
to  say :  — 

First.  The  said  Wilkesbarre  Company  hereby  sells 
and  agrees  to  deliver  to  the  Reading  Company  the 
entire  product  of  its  collieries  now  opened  and  here- 
after to  be  opened  and  operated,  for  and  during  the 
entire  period  hereinafter  fixed  and  determined,  and 
the  Reading  Company  hereby  agrees  to  take,  receive 
and  pay  for  the  product  of  the  said  collieries  and  of 
each  of  them,  for  and  during  the  entire  term  of  this 
agreement,  as  hereinafter  provided ;  and  to  ship  the 
same  in  accordance  with  the  existing  agreements  be- 
tween the  Lehigh  Coal  and  Navigation  Company  and 
the  Central  Railroad  Company  of  New  Jersey. 

Second.  The  Reading  Company  agrees  that  from 
its  allotment  of  cars  which  it  shall  receive  from  time 
to  time  from  the  Central  Railroad  Company  of  New 
Jersey,  or  any  lessee  thereof,  it  shall  and  will  at  all 
times  during  the  continuance  of  this  contra^'t  cause 
to  be   distributed   to   the  collieries  operated  by  the 


212  INDUSTRIAL   COMBINATIONS. 

Wilkesbarre  Company  such  number  of  cars  as  will 
enable  the  Wilkesbarre  Company  to  mine  and  ship 
monthly,  in  as  nearly  daily  quantities  as  practicable 
(Sundays  and  legal  holidays  excepted),  such  an  amount 
of  anthracite  coal  as  it  can  produce  from  said  collieries 
as  a  whole,  by  working  the  same  for  as  many  days 
and  to  as  full  a  capacity  in  each  month  as  the  Reading 
Company  works  its  own  collieries.  It  being  under- 
stood and  agreed  that  the  Wilkesbarre  Company  shall 
have  the  right,  from  month  to  month,  to  apportion  its 
entire  product  among  its  various  collieries  as  it  shall 
deem  best. 

And  further,  in  case  the  collieries  located  on  the 
lines  and  branches  of  the  Lehigh  and  Susquehanna 
Railroad,  other  than  those  of  the  Wilkesbarre  Com- 
pany, should  not,  for  any  cause,  continue  to  ship  the 
same  proportion  of  the  total  tonnage  of  the  whole 
anthracite  region  over  the  said  lines  Avhich  was  shipped 
from  them  in  1891,  then,  and  in  that  case,  the  Wilkes- 
barre Company  shall  be  at  liberty  to  mine  and  deliver, 
and  the  Reading  Company  shall  receive  and  pay  for 
an  amount  equal  to  the  deficiency,  in  addition  to  the 
quantity  hereto  provided  to  be  mined  and  sold  and 
received  and  paid  for,  and  the  Reading  Company  shall 
cause  sufB.cient  cars  to  be  supplied  therefor;  so  that 
there  shall  always  continue  to  be  shipped  monthly 
over  the  said  railroads  of  the  central  system  an  amount 
of  anthracite  coal  equal  in  proportion  of  the  total 
production  of  anthracite  coal  in  the  whole  anthracite 
region  to  the  total  proportion  shipped  on  the  said 
system  in  the  year  ending  December  olst,  1891. 


APPENDIX   VIII. 


213 


Third.  The  Reading  Company  agrees  to  pay  and 
the  Wilkesbarre  Company  agrees  to  accept  monthly 
the  following  prices  for  the  said  coal,  when  prepared  in 
accordance  with  the  standard  hereinafter  mentioned  and 
delivered  in  railroad  cars  at  the  said  breaker,  viz. :  — 

For  all  sizes  larger  than  pea  coal,  sixty  (60)  per 
cent,  of  the  average  "free  on  board"  price  received 
for  said  sizes  at  tide  points  at  or  near  New  York 
between  Perth  Amboy  and  Hoboken  both  inclnsive, 
for  the  "Wyoming  and  Lackawanna  coals  of  the  Lehigh 
Valley  Coal  Company,  and  the  Lehigh  and  Wilkes- 
barre Coal  Company  (hereinafter  called  AVyoming 
Coal)  when  the  said  f.  o.  b.  price  is  four  dollars  ($4) 
per  ton  or  less ;  when  the  said  average  f.  o.  b.  price  is 
more  than  four  dollars  ($4)  per  ton,  forty  (40)  per 
cent,  of  the  increase  above  four  dollars  (•1?4),  until  the 
f.  o.  b.  price  realized  reacdies  four  dollars  and  fifty  cents 
($4.50),  after  which  the  Wilkesbarre  ('ompany  shall 
receive  thirty  (30)  per  cent,  of  any  advance  in  the  said 
f.  o.  b.  price  above  four  dollars  and  fifty  cents  ($4.50). 

For  example :  — 


When  the 

f.  o.  b.  [irice 

is, 

Wilkesbarre 
C()iii|)any 
will  receive, 

Reading 

C'oini)aiiy 

will  receive, 

When  the 
I',  1).  b.  price 

is. 

Wilkesbarre 

Company 
will  receive, 

Keaflinp 

Company 

will  receive, 

$3.80 
3.90 

$2.28 
2.34 

$1.52 
1.56 

$4.50 
4.60 

$2.60 
2.63 

$1.90 
1.97 

4.00 

2.40 

1.00 

4.70 

2.(!6 

2.04 

4.10 

2.44 

1.66 

4.80 

2.69 

2.11 

4.20 

2.48 

1.72 

4.90 

2.72 

2.18 

4.30 

2.52 

1.78 

5.00 

2.76 

2.26 

4.40 

2.66 

1.84 

etc. 

etc. 

etc. 

214  INDUSTRIAL  COMBINATIONS. 

In  cases  where  the  said  average  f.  o.  b.  price  received 
for  any  size  or  sizes  of  Wyoming  coal  is  less  than  ^  4 
per  ton,  and  for  other  sizes  the  said  price  is  at  or  above 
$  4  per  ton,  it  is  understood  that  settlement  shall  be 
made  on  the  coal  shipped  by  the  Wilkesbarre  Company 
in  the  manner  indicated  in  the  following  example :  — 

10  tons  of  broken,  at  an  average  f.  o.  b.  price  of  $3.50  §35.00 

20  tons  of  egg,  at  an  average  f.  o.  b.  price  of  $  3.75  75.00 

40  tons  of  stove,  at  an  average  f.  o.  b.  price  of  $4.30  172.00 

30  tons  of  nut,  at  an  average  f .  o.  b.  price  of  $  4  120.00 

§402.00 

Or  an  average  of  $  4.02  per  ton ;  proportion  to  be  paid 
the  Wilkesbarre  Company  will  be  60  per  cent,  of  $4 
and  40  per  cent,  of  2  cents  —  $  2.408.  For  pea  coal, 
forty -five  (45)  per  cent,  of  the  said  f.  o.  b.  price  at  tide 
points  at  or  near  New  York  realized  for  Wyoming 
coal  when  the  said  price  is  two  dollars  and  fift}'  cents 
($  2.50)  or  less ;  and  for  each  advance  of  ten  (10)  cents 
per  ton  in  the  said  f.  o.  b.  price  above  two  dollars  and 
fifty  cents  {$  2.50),  the  proportion  paid  the  Wilkes- 
barre Company  shall  be  increased  one  (1)  per  cent., 
until  the  said  f.  o.  b.  price  reaches  the  price  of  any  of 
the  larger  sizes,  after  which  the  said  proportion  shall 
be  adjusted  on  the  basis  of  the  price  received  for  such 
larger  sizes. 

For  example :  — 

When  the  f.  o.  b.  price  at  tide  for  Wyoming  pea  is 
two  dollars  and  fifty  cents  (f  2.50)  or  less,  the  Wilkes- 
barre Company  Avill  be  paid  forty-five  (45)  per  cent,  of 
the  same;  when  the  said  f.  o.  b.  price  is  two  dollars 


APPENDIX  vin.  215 

and  sixty  cents  ($2.60)  the  proportion  thereof  paid 
the  Wilkesbarre  will  be  forty -six  (46)  per  cent. ;  Avhen 
the  said  f.  o.  b.  price  is  two  dollars  and  seventy  cents 
($2.70),  the  proportion  thereof  paid  the  Wilkesbarre 
Company  will  be  forty-seven  (47)  per  cent.,  and  increas- 
ing in  the  manner  and  proportion  as  above  provided. 

For  buckwheat  coal,  thirty -two  (32)  per  cent,  of  the 
average  f.  o.  b.  price  at  tide  points  at  or  near  New 
York  when  the  said  price  is  two  dollars  ($  2)  per  ton 
or  less ;  and  for  each  advance  of  ten  (10)  cents  per  ton 
in  the  said  f.  o.  b.  price,  the  proportionate  price  paid 
the  \\'ilkesbarre  Company  shall  be  increased  two  and 
six-tenths  (2.6)  per  cent.,  until  the  said  f.  o.  b.  price 
reaches  two  dollars  and  iifty  cents  ($  2.;')0),  after  which 
the  proportionate  price  paid  the  Wilkesbarre  Company 
shall  advance  one  (1)  per  cent,  of  each  ten  (10)  cents 
advance  in  the  f.  o.  b.  price  above  two  dollars  and  fifty 
cents  ($  2.50),  as  in  the  case  of  pea  coal  above  men- 
tioned. 

For  example :  — 

When  the  price  realized  for  Wyoming  buckwheat 
is  two  dollars  ($2),  the  Wilkesbarre  Company  shall 
be  paid  thirty-two  (32)  per  cent,  of  that  sum,  or  sixty- 
four  cents ;  Avhen  the  i)rice  is  two  dollars  and  ten  cents 
($2.10),  the  Wilkesbarre  Company  shall  be  paid  thirty- 
four  aiul  six-tenths  (34.6)  per  cent,  of  that  sum,  or 
seventy -two  and  sixty-six  one  lunidredths  (72.66) 
cents ;  when  the  f.  o.  b.  price  is  two  dollars  and 
twenty  cents  ($2.20)  per  ton,  tlic  Wilkesbarre  Com- 
pany shall  l)e  piiid  tlnrty-scvcn  and  two-tcntlis  (37.2) 
per  cent.,  or  eighty -one  and  eighty-four  one  hundredths 


216  INDUSTRIAL   COMBINATIONS. 

(81.84)  cents ;  when  the  f.  o.  b.  price  is  two  dollars  and 
fifty  cents  (f>2.50),  the  Wilkesbarre  Company  shall  be 
paid  forty-five  (45)  per  cent.,  or  one  dollar  and  twelve 
and  one-half  cents  (f  1 .12|-) ;  when  the  f .  o.  b.  price  is 
two  dollars  and  sixty  cents  (f  2.60),  the  Wilkesbarre 
Company  shall  be  paid  forty-six  (46)  per  cent,  of  said 
price,  and  so  on  as  in  the  case  of  pea  coal  above  men- 
tioned. 

For  No.  2  buckwheat  coal  and  smaller  sizes  (if 
marketed  and  sold  by  the  Reading  Company),  twenty 
(20)  per  cent,  of  the  said  average  f.  o.  b.  price  shall  be 
paid  the  Wilkesbarre  Company  when  the  said  price 
is  $  1.20  per  ton  or  less ;  and  for  each  advance  of  ten 
cents  per  ton  in  the  said  price  the  Wilkesbarre  Com- 
pany shall  receive  one  and  one-half  per  cent,  increase, 
until  the  said  price  reaches  two  dollars  ($  2)  per  ton, 
after  which  the  price  paid  the  Wilkesbarre  Company 
shall  advance  two  and  six-tenths  per  cent,  for  each  ten 
cents  advance  in  the  said  price  above  two  dollars  per 
ton,  advancing  from  that  point  in  the  same  manner 
and  in  the  same  proportion  as  buckwheat  coal. 

Provided,  however,  that  on  Honey  Brook  and  other 
Lehigh  coal  of  like  grade,  the  price  to  be  paid  to  the 
Wilkesbarre  Company  by  the  Reading  Company  shall 
be  based  on  the  average  net  f .  o.  b.  price  received  for 
the  Honey  Brook  and  other  Lehigh  coals  of  the 
Lehigh  Valley  Coal  Company  and  Wilkesbarre  Coal 
Company,  at  said  tidal  points  at  or  near  Xew  York, 
anything  herein  contained  to  the  contrary  notwith- 
standing. 

The  amounts  so  to  be  paid  shall  be  without  any 


APPENDIX    VTII.  217 

deduction  whatsoever  for  demurrage  or  charges  other 
than  commissions  paid,  and  the  payments  thereof  shall 
be  made  monthly  on  the  twentieth  (2r)th)  day  of  each 
month  for  all  coal  delivered  to  the  Keading  Company 
during  the  next  preceding  month,  and  the  said  aver- 
age prices  on  which  the  amount  paid  is  based  shall  be 
the  average  prices  for  coal  sold  and  delivered  during 
such  preceding  month.  The  Keading  Company  shall 
and  will  keep  full  and  true  accounts  of  the  sales  of 
all  coal  delivered  to  it  by  the  Wilkesbarre  Com})any 
under  the  provisions  of  this  contract,  specifying  the 
price  realized  for  each  size  of  coal  from  each  of  the 
mines  or  collieries,  as  far  as  reasonable  and  practicable, 
and  the  results,  both  gross  and  net,  of  the  sales  of 
said  coal,  all  of  which  said  accounts  shall  be  open  to 
the  examination  and  inspection  of  the  officers  and 
agents  of  the  said  Wilkesbarre  Company  at  all  reason- 
able times. 

Fourth.  The  percentages  of  the  various  sizes  of  coal 
to  be  delivered  under  this  agreement  shall  be  the 
same  as  those  produced  at  the  collieries  of  the  dis- 
trict in  which  the  mines  are  resi)ectively  located,  but 
the  Reading  Clonipany  shall  not  be  recpiired  to  take 
a  greater  amount  of  lumj)  and  steamboat  sizes  than 
in  pro})ortion  to  the  whole  amount  of  such  sizes  sold 
for  the  time  lieing  by  the  Keading  Company. 

Fifth.  In  determining  the  (piantity  of  coal  sold  and 
received  under  this  agreement,  twenty-two  hundred 
and  i'oi'ty  (L'.'JIO)  iioiinds  shall  constitute  a  ton.  and 
the  sauKi  shall  Ik-  weighed  on  ihe  scales  ol'  Ihe  ('cntral 
Railroad  of  Isew  Jersey,  and  tlu'  am(»unt  ol  coal  con- 


218  INDUSTRIAL  COMBINATIONS. 

tained  in  each  car  shall  be  determined  by  the  certifi- 
cate of  the  weighmaster  at  such  scales,  it  being  agreed 
that  he  shall  deduct  from  the  gross  weight  of  the  coal 
one  per  centum  for  waste ;  provided  that  the  require- 
ments of  any  leases  to  or  held  by  the  Wilkesbarre  Com- 
pany as  to  the  mode  of  weighing  coal  mined  thereunder 
shall  be  strictly  observed. 

Sixth.  The  Wilkesbarre  Company  covenants  and 
agrees  that  the  said  coal  (not  including  culm)  shall  be 
properly  prepared  for  market  and  shall  be  delivered 
on  board  the  cars  at  the  breakers  in  good  merchantable 
condition,  free  from  dirt,  and  shall  not  at  any  time 
contain  a  greater  amount  of  bone  or  slate  than  is 
usually  present  in  good  merchantable  coal  of  the  re- 
spective sizes,  and  the  same  shall  be  siibject  to  inspec- 
tion by  a  competent  inspector,  to  be  appointed  and 
paid  by  the  parties  hereto  jointly,  whose  decision  as  to 
the  quality  of  coal  shall  be  final  and  conclusive  upon 
both  parties.  Such  inspector  when  so  appointed  shall 
be  subject  to  removal  on  the  request  of  either  party. 

The  different  sizes  of  coal  shall  in  no  case  contain 
more  than  the  following  percentage  of  refuse  (consist- 
ing of  slate,  rock,  fire-clay  and  bone  with  less  than 
forty  per  cent,  of  fixed  carbon),  viz. :  Broken,  one  per 
cent. ;  egg,  two  per  cent. ;  stove,  four  per  cent. ;  nut, 
an  average  of  not  more  than  five  per  cent.,  and  at  no 
time  to  exceed  a  maximum  of  seven  per  cent. ;  pea,  ten 
per  cent. ;  buckwheat,  fifteen  per  cent.  Xo  more  than 
the  following  percentage  of  bone  containing  a  propor- 
tion of  fixed  carbon  ranging  between  forty  and  seventy 
per  cent.,  viz.  :  broken,  two  per  cent. ;  egg,  two  per 


APPEISTDIX  vin.  219 

cent. ;  stove,  three  per  cent. ;  nut,  five  per  cent.  Pea 
and  buckwheat  coal  shall  not  contain  such  proportion 
of  said  bone  as  to  reduce  their  price  below  the  aver- 
age market  prices  of  those  sizes. 

If  the  condition  of  the  trade  shall  at  any  time  or 
times  require  a  higher  standard  of  preparation  than  as 
aforesaid,  the  Wilkesbarre  Company  shall  prepare  the 
coal  so  as  to  conform  to  such  high  standard ;  provided, 
however,  that  if  they  shall  claim  that  they  shoidd  be 
reimljursed  for  any  increased  expenses  involved,  and 
the  parties  shall  not  agree  as  to  the  amount  of  such 
reimbursement,  the  question  shall  be  referred  to  ar- 
bitrators, to  be  appointed  as  hereinafter  provided. 

When  the  inspector  is  making  a  test  for  im})urities 
in  tlio  coal  he  shall,  whenever  possible,  take  the  sam- 
ple from  the  coal  as  it  flows  from  the  chute  into  the 
car.  If  at  any  time  the  first  test  is  unsatisfactory  to 
either  party  the  inspector  shall  make  two  other  tests 
of  the  coal  in  question  and  the  average  of  the  three 
tests  on  one  car  shall  then  be  final.  If  at  any  time  it 
is  necessary  to  test  a  car  after  it  leaves  the  chute,  a 
sample  shall  be  obtained  by  taking  equal  quantities  of 
coal  from  the  middle  and  eacdi  side  and  end  of  the  car, 
in  order  to  ascertain  the  average  quality  of  the  coal 
tested  in  that  car.  The  cost  of  all  inspections  shall 
be  equally  divided  between  the  parties  hereto,  except 
that  the  chief  insjjector  shall  l)e  paid  by  the  Reading 
Com])any. 

Seveutli.  Tlio  l\oading  ('omjxiny  shall  and  will  cause 
all  the  coal  purchased  under  th(>  provisions  of  this  con- 
tract to  pass  to  or  towards  its  market  over  and  by  the 


220  INDUSTRIAL  COMBINATIONS. 

lines  of  the  Central  Railroad  of  New  Jersey  system,  it 
being  the  intention  hereof  to  provide  that  the  Reading 
Company,  consignor  and  shipper  of  said  coal,  shall  not 
and  will  not  divert  or  cause  to  be  diverted  from  the 
transportation  lines  or  terminals  comprising  the  sys- 
tem of  the  Central  Railroad  Company  of  New  Jersey 
the  present  traffic  of  said  Central  Railroad  Company  of 
New  Jersey,  or  any  traffic  which  would  naturally  go  to 
or  towards  its  destination  by  or  over  the  said  system. 

Eighth.  It  is  mutually  agreed  that  if  by  reason  of 
strikes  among  employees  of  either  party  or  of  the  rail- 
road company  or  companies  over  whose  lines  the  coal 
is  to  be  shipped,  or  by  reason  of  any  injury  to  the 
works,  buildings,  fixtures,  or  other  property  of  either 
party,  or  of  such  railroad  companies,  either  party  shall 
be  temporarily  disabled  from  furnishing  or  transj)ort- 
ing  coal  as  hereinbefore  provided,  the  party  so  disabled 
shall  not  be  liable  for  such  nonfulfilment  of  its  con- 
tract as  shall  result  therefrom,  but  shall  make  every 
reasonable  exertion  to  remove  such  disability  as 
promptly  as  possible. 

Ninth.  It  is  further  agreed  that,  if  at  any  time  dur- 
ing the  continuance  of  this  contract  the  selling  price 
of  coal  at  tide-water  shall  be  so  low  that  the  said  sixty 
(60)  per  centum  thereof  shall  not  be  sufficient  to  pay 
the  cost  of  mining  the  same,  together  with  a  reason- 
able allowance  for  royalties,  then  the  "Wilkesbarre 
Company  shall  be  at  liberty  to  suspend  deliveries  of 
coal  thereunder  until  the  prices  to  be  paid  therefor 
shall  be  sufficient  to  pay  the  cost  of  mining  and  such 
reasonable  royalties,  without  liability  to  payment  of 
any  damages  for  such  suspension  of  deliveries. 


APPENDIX   VIII.  221 

Tenth.  The  Wiltesbarre  Company  shall  have  the 
right  to  sell  coal  at  its  breakers  at  retail  to  be  taken  by 
wagons,  but  not  to  be  shipped  in  railroad  cars  except 
for  delivery  under  royalty  agreement  as  hereinbefore 
provided. 

Eleventh.  Should  any  disagreement  arise  between 
the  parties  hereto  as  to  any  matter  or  thing  arising 
under  or  in  consequence  of  this  agreement  and  the 
operations  carried  on  hereunder,  or  if  the  parties 
hereto  shall  fail  to  agree  as  to  what  ought  to  be  done 
or  omitted,  in  respect  to  any  matter  or  thing  not  specif- 
ically covered  by  the  express  provisions  of  this  con- 
tract, but  coming  within  the  general  scoi)e  and  true 
intent  and  purposes  thereof,  every  such  disagreement 
shall  1)0  determined  l)y  arbitration,  one  arbitrator  to  be 
appointed  by  the  Wilkesbarre  Company  and  the  other 
to  be  appointed  by  the  Keadiug  Company,  and  the 
finding  of  such  arbitrators  shall  be  final  and  conclusive 
upon  the  parties  hereto  as  to  such  controversy. 

In  any  case  where  the  arbitrators  are  to  be  aj)i)()inted 
hereunder,  and  either  the  Wilkesbarre  Company  or  the 
Reading  Company  shall  neglect  or  refuse  to  make  an 
appointment  for  a  period  of  ten  days  after  being  re- 
quested in  writing  by  the  other  party  to  make  such 
appointment,  which  request  shall  set  forth  specifically 
the  matter  or  thing  to  be  submitted,  then  the  arbitra- 
tor ai)i)oint('d  by  tlie  i)arty  not  in  default  in  making 
such  appointment  shall  api)oiut  an  arl)itrator  for  the 
party  so  in  default,  and  the  two  arbitrators  so  ap- 
pointed shall  have  the  same  power  as  though  one  of 
them  had  been  appointed  by  each  of  the  said  parties, 


222  IITOUSTRIAL  COMBINATIONS. 

and  in  case  wliere  the  arbitrators  so  chosen  shall  disar 
gree,  they  shall  have  the  right  to  appoint  an  umpire, 
and  the  decision  of  a  majority  of  the  three  shall  have 
the  same  force  and  effect  as  though  the  two  arbitrators 
first  appointed  should  have  agreed  upon  such  decision 
as  their  finding.  In  case  the  two  arbitrators  first 
chosen  by  either  method  cannot  agree,  and  do  not 
agree,  within  five  days  after  such  disagreement,  and 
do  not  select  an  umpire  as  above  provided,  then  upon 
application  by  either  the  Wilkesbarre  Company  or  the 
Reading  Company,  such  umpire  may  be  appointed  by 
the  president  judge  of  the  court  of  common  pleas  of 
any  county  of  the  State  of  Pennsylvania. 

Twelfth.  This  contract  is  expressly  upon  condition 
that  the  Reading  Company  shall  not  transfer,  assign, 
or  pledge  it  in  any  manner,  or  interest  or  associate 
therein  any  other  person  or  persons,  body  politic  or 
corporate,  without  the  written  consent  of  the  Wilkes- 
barre Company  first  had  and  obtained.  And  that  no 
judicial  or  other  sale  or  transfer  of  any  kind  whatever, 
whether  upon  or  under  any  writ,  order,  or  decree  issued 
by  or  out  of  any  court,  or  by  any  justice  of  the  peace, 
alderman,  or  other  judicial  officer  or  tribunal,  or  by 
virtue  of  or  in  compliance  with  any  order  or  decree  of 
any  court  of  equity  or  chancery  or  any  proceedings  in 
insolvency  or  bankruptcy,  shall  have  the  effect  of  trans- 
ferring the  interest  of  the  Reading  Company  herein 
for  any  time  or  term  whatever  to  any  person  or  per- 
sons, body  politic  or  corporate,  without  the  written 
consent  of  the  Wilkesbarre  Company  first  had  and 
obtained. 


APPENDIX  VIII.  223 

Thirteenthi.  In  case  of  the  failure  of  the  Eeading 
Company  for  thirty  days  to  make  any  payment  here- 
under when  and  as  the  same  shall  become  due  and  pay- 
able, or  in  case  of  any  breach  of  covenant  on  its  part, 
and  thirty  days'  notice  thereof  given  by  the  Wilkes- 
barre  Company  to  the  Reading  Company  if  the  same  be 
not  fully  compensated  within  such  period  of  thirty 
days,  then  the  Wilkesbarre  Company  may  at  its  option 
declare  this  contract  at  an  end,  and  thereupon  all  rights 
of  the  Reading  Company  hereunder  shall  cease  and 
determine :  provided,  that  the  delay  or  omission  of  the 
Wilkesbarre  Company  at  any  time  or  times  to  exercise 
the  rights  conferred  by  this  clause  of  this  contract 
shall  not  be  construed  to  be  nor  to  operate  as  a  waiver 
of  any  such  right  or  rights  in  respect  to  existing  or 
subsequent  defaults  of  the  Reading  Company,  and 
that  any  annulment  or  determination  of  this  contract 
as  aforesaid  shall  be  without  prejudice  to  the  right  of 
the  Wilkesbarre  Company  to  recover  damages  past  or 
future  for  any  breacli  thereof  by  the  Reading  Company. 

And  the  Reading  C()m])any  hereby  covenants  aud 
agrees  that  it  will  forthwith,  after  notice  of  the  exer- 
cise of  such  option  and  of  an  intention  to  declare  this 
contract  at  an  end  on  the  part  of  the  Wilkesbarre 
Company,  inunediately  execute  and  deliver  to  the 
Wilkesbarre  ('om])any  all  agreements  and  assignments 
that  may  be  necessary  or  jiroper  to  reinvest  the  ^^'ilkes- 
barre  Company  with  all  rights  under  any  agreements 
or  contracts  aforesaid  as  fully  as  they  were  held  and 
enjoyed  by  the  Wilkesbarre  ComiJan}-  at  and  before 
the  time  this  agreement  was  made. 


224  INDUSTRIAL   COMBINATIONS. 

Fourteenth.  It  being  the  intention  hereof  and  of  the 
parties  hereto  that  this  contract  shall  continue  for  a 
period  coincident  with  the  term  of  the  above  recited 
lease  from  the  Central  Railroad  Company  of  New 
Jersey  to  the  Port  Reading  Railroad  Company,  it  is 
hereby  further  mutually  covenanted  and  agreed  that 
this  contract  shall  be  binding  upon  and  enure  to  the 
benefit  of  the  parties  hereto  and  their  successors  and 
assigns  respectively  for  and  during  the  period  of  nine 
hundred  and  ninety-nine  (999)  years  from  the  date 
hereof,  unless  the  said  lease  of  the  Central  Railroad 
Company  of  Xew  Jersey  to  the  Port  Reading  Railroad 
Company  shall  be  cancelled  or  annulled  before  the  ter- 
mination of  that  period,  and  that  in  that  event  this 
contract  shall,  at  the  option  of  either  party  thereto  and 
upon  written  notice  by  such  party  to  the  other  of  its 
intention  to  exercise  that  option,  cease  to  be  in  force  at 
and  upon  the  termination,  cancellation,  or  annulment 
of  the  said  lease. 

In  witness  whereof  the  parties  hereto  have  caused 
their  corporate  seals  to  be  hereunto  affixed,  attested  by 
their  secretaries,  and  these  presents  to  be  signed  by 
their  respective  presidents,  the  day  and  year  aforesaid. 
Witness : 
THE  LEHIGH  AND  WILKESBARRE  COAL  COMPANY, 
By  J.  R.  MAXWELL,  President. 
Attest : 

W.  T.  ZELL,  Secretary.  [SEAL.] 

THE   PHILADELPHIA  AND   READING  COAL  AND 
IRON  COMPANY, 

By  A.  A.  McLEOD,  President. 
Attest : 

F.  P.  KAERCHER,  Secretary.  [SEAL.] 


APPENDIX  IX.  225 


APPENDIX   IX. 

ABSTRACT     FROM     LEGAL    PROCEEDINGS 
AGAINST  THE  READING  COAL  COMBINE. 

IN  CHANCERY  OF  NEW  JERSEY. 

John  P.  Stockton,  Attorney  Gkneral  of  New  Jersey, 
Informant,  vs.  The  Central  Railroad  Company  of  New 
Jersey,  The  Port  Reading  Railroad  Company,  and  the 
Philadelphia  and  Reading  Railroad  Company,  De- 
fendants. 

(1)  A  corporation,  created  by  statute,  possesses  no  rights 
and  can  exercise  no  powers  which  are  not  expressly  given  or  to 
be  necessarily  implied. 

(2)  Such  a  corporation  can  not  lease  or  dispose  of  any  fran- 
chise needful  in  the  performance  of  its  obligations  to  the  State 
without  legislative  consent. 

(;>)  The  act  of  March  11,  1880,  which  amends  the  seven- 
teenth section  of  the  act  entitled  "An  act  to  authorize  the 
formation  of  railroad  corporations  and  to  regulate  the  same  " 
(Rev.,  0.30),  is  free  from  constitutional  inlirmity  in  its  title,  and 
is  sufficiently  broad  in  its  terms  to  cdnfer  power  upon  iailn)ad 
corporations  chartered  by  special  law. 

(4)  The  act  of  May  2,  1885,  entitled  "  An  act  respecting  the 
leasing  of  railroads"  is  constitutional. 

(5)  E(iuity  looks  at  the  .suljstance,  and  will  disregard  names 
and  penetrate  disguises  of  form,  to  discover  and  deal  with  it. 


226  INDUSTRIAL  COMBINATIONS. 

(G)  Where  a  corporate  excess  of  power  tends  to  the  i^ublic 
injviry,  or  to  defeat  public  policy,  it  may  be  restrained  in  equity 
at  the  suit  of  the  attorney  general. 

(7)  A  railroad  company  of  this  State  leased  its  franchises 
and  roads  to  the  railway  corporation  of  another  State.  The 
lease  was  not  only  unauthorized,  but  was  expressly  forbidden 
by  law.  Its  effect  was  to  combine  coal  producers  and  carriers 
and  to  partially  destroy  competition  in  the  production  and  sale 
of  anthracite  coal,  a  staple  commodity  of  the  State.  Held^  to 
be  a  corporate  excess  of  power  which  tends  to  monopoly  and 
the  public  injury. 


On  order  to  show  cause  why  injunction  shall  not 
issue;  heard  upon  information,  exhibits,  and  affida- 
vits, answers  of  the  defendants,  affidavits,  and  limited 
proofs  taken  under  order  of  the  chancellor  in  con- 
formity with  the  provisions  of  Eule  121. 

The  object  of  the  information  is  to  have  a  certain 
indenture  of  lease  made  between  the  Central  Railroad 
Company  of  New  Jersey  and  the  Port  Reading  Rail- 
road Company,  and  also  a  certain  tripartite  agreement 
between  the  Central  Railroad  Company  of  New  Jersey, 
the  Port  Reading  Railroad  Company,  and  the  Phila- 
delphia and  Reading  Railroad  Company  decreed  to  be 
tdtra  vires,  and  therefore  void ;  and  void  also  upon  the 
ground  of  public  policy,  in  that  they  tend  to  create  a 
monopoly  of  the  anthracite  coal  trade  within  the  State, 
by  stifling  competition  between  the  contracting  cor- 
porations, and  thereby  to  increase  the  price  of  anthra- 
cite coal  to  the  inhabitants  of  the  State. 

And  to  effectually  destroy  the  effect  of  such  lease 
and   agreement,  under   which   the   property  and  the 


APPENDIX  IX.  227 

franchises  of  the  Central  liailroad  Company  of  New 
Jersey  have  already  been  delivered  to  the  Port  Read- 
ing Railroad  Company,  it  seeks  a  mandatory  decree 
which  shall  enjoin  the  Port  Reading  Railroad  Com- 
pany to  surrender  and  return  to  the  Central  Railroad 
Company  the  Corporate  francliises  and  property,  and 
a  restrictive  decree  which  sliall  perpetually  restrain 
the  Port  Reading  Railroad  (Company  from  hereafter 
controlling  and  intermeddling  with  such  franchises 
and  property,  and  the  three  corporate  defendants, 
from  all  future  combinations  to  do  that  which  will 
arljitrarily  increase  or  tend  to  increase  the  price  of 
coal  to  the  inhabitants  of  New  Jersey. 

I  am  asked  to  now  issue  an  injunction  that  will 
temporarily,  at  least,  effect  all  these  ends. 

The  Central  Railroad  Company  of  New  Jersey  was 
incorporated  by  special  act  of  the  Legislature  of  this 
State  entitled  "  An  act  to  incorporate  the  Somerville 
and  Easton  Railroad  Company,"  approved  February 
26,  1847.  Before  tluMi.  on  the  9th  of  February,  1831, 
the  Elizabeth! own  and  Soniei'ville  Railroad  Company 
had  been  incoi'porated,  with  ])ower  to  construct  a  rail- 
road from  Elizabetlitown  to  Somerville.  Tlie  Somer- 
ville and  Easton  Raili'oad  etfected  a.  eoiitinuation  oi 
railroad  communication  from  Somerville  to  I'liillips- 
burg  on  the  Dehiware  River  op])osite  J'^aston,  ]'a.  J>v 
a.  siiiipli'ineiit  1()  the  cliai'lcr  ol'  the  Soiiiervilh'  and 
Easton  IJailroad  ('om])any,  approved  Kehruary  -!-, 
181'.),  that  eoniiJany  was  autlioi'ized  to  ])nrchase  the 
Elizabethtown  and  Soniervilh'  Ivailmad.  and  it 
w.as  provifh'il   that    Ihe   two   railroads   shouhl    l)e   con- 


228  INDUSTllIAL   COMBINATIONS. 

trolled  by  the  charter  of  the  Sonierville  and  Easton 
Railroad  Company,  and  that  the  controlling  com- 
pany should  thereafter  be  called  the  Central  Rail- 
road Company  of  New  Jersey. 

The  purchase  was  consummated  on  the  1st  day  of 
April,  1849.  In  1860,  by  another  legislative  act,  the 
Central  Railroad  Company  was  authorized  to  extend 
its  road  to  the  New  York  Bay  at  or  south  of  Jersey 
City.  From  time  to  time,  by  legislative  act,  the  cap- 
ital of  the  company  was  increased,  until  now  the 
stock  outstanding  amounts  in  round  figures  to  about 
122,500,000  of  an  authorized  capital  of  $30,000,000. 
Besides  this  large  capital,  the  company  has  an  indebt- 
edness of  upwards  of  $45,000,000.  It  owns,  leases,  or 
controls  more  than  forty  tributary  railroads.  It  has  a 
large  and  prosperous  business  and  earns  a  respectable 
dividend  upon  its  capital  stock  beyond  the  payment 
of  the  interest  upon  its  indebtedness  and  its  other 
fixed  charges.  Its  assets  exceed  in  value  its  out- 
standing capital  stock  and  its  indebtedness,  which 
together  aggregate,  as  has  been  indicated,  more  than 
167,000,000.  In  1871  it  leased  the  Lehigh  and  Sus- 
quehanna Railroad,  running  from  Wilkesbarre  to 
Easton,  in  Pennsylvania,  from  its  owner,  the  Lehigh 
Coal  and  Navigation  Company,  a  corporation  of  Penn- 
sylvania, and  also  purchased  the  rolling  stock  and 
other  equipment  of  that  road.  This  leased  railroad 
extends  through  a  valuable  portion  of  the  anthracite 
coal  region  in  Pennsylvania. 

About  the  same  time  the  Central  Railroad  Company 
also  invested  in  coal  lands  by  organizing  or  causing  to 


APPENDIX  IX.  229 

be  organized  the  Lehigli  and  Wilkesbarre  Coal  Com- 
pany, and  becoming  the  owner  of  all  or  substantially 
all  of  its  capital  stock.  This  coal  company  issued 
bonds  which  the  Central  Railroad  Company  guaranteed. 
In  virtue  of  its  interests  in  the  anthracite  coal  region 
and  the  advantageous  location  of  its  roads,  the  Cen- 
tral Railroad  Company  has  become  a  considerable  coal 
carrier,  not  only  from  the  mines  of  the  company  in 
which  it  is  interested,  but  also  from  the  mines  of 
other  miners  not  having  railroad  facilities  in  and 
through  the  States  of  New  Jersey  and  Pennsylvania 
to  the  New  York  Harbour^  which  is  the  greatest  dis- 
tributing point  for  anthracite  coal  in  the  United 
States. 

The  Philadelphia  and  Reading  Company,  a  corpo- 
ration of  the  State  of  Pennsylvania,  is  also  possessed 
of  railroads  running  into  the  anthracite  coal  region  of 
Pennsylvania,  and  is  an  extensive  coal  cai  ricr.  Save 
a  few  shares  used  to  (pialify  directors,  it  is  the  owner 
of  the  entire  capital  stock  of  the  Reading  Coal  and 
Iron  Company,  which,  in  the  year  1891,  i^roduced  from 
its  collieries  8,203,4()5  tons  of  coal,  being  one-fifth  of 
the  total  produce  of  anthracite  coal  from  Pennsylvania 
during  that  year.  Along  the  lines  of  the  Philadelphia 
and  Reading's  railroads  there  are  also  other  coal  miniMs 
who  find  a  market  for  their  coal  by  the  means  of 
transportation  it  affords.  The  ('aj)ital  stock  of  the 
Philadelphia  and  Reading  Conipany,  at  ])ar.  aiiKnints 
to  about  140,000,000,  and  its  indel)le(liiess  to  more 
than  .f;  1  (;0,000,000,  all  of  which  is  balanced  l.y  assets 
alleged  to  be  of  equal  value.     The  annual  report  of 


230  INDUSTRIAL   COMBINATIONS. 

the  directors  of  this  company  for  tlie  year  ending 
November  30,  1891,  referring  to  the  coal  lands  con- 
trolled by  that  company,  contains  this  statement : 

"The  coal  lands  comprise  in  extent  about  32  per 
cent,  of  the  entire  anthracite  coal  fields  of  the  State, 
and  taking  into  account  the  aggregate  thickness  of  the 
veins  on  the  company's  lands  and  the  greater  propor- 
tionate depletion  of  the  estate  in  the  other  regions 
which  has  been  going  on  for  many  years,  it  must  be 
conceded  that  Ave  have  at  least  50  per  cent,  of  the 
entire  deposit  remaining  unmined." 

Throughout  this  report  and  rej)orts  similar,  when- 
ever the  lands  cf  the  Reading  Coal  and  Iron  Company 
are  alluded  to,  they  are  spoken  of  as  the  property  of 
the  Philadelphia  and  Reading  Railroad  Company,  and 
that  company  itself,  as  the  property  of  the  railroad. 

It  appears  also  that  the  Philadelphia  and  Reading 
Railroad  Company  has  become  the  lessee  of  the  Lehigh 
Valley  Railroad  Company,  a  corporation  of  the  State 
of  Pennsylvania,  which  in  turn  is  the  lessee  of  the 
Easton  and  Amboy  Railroad  Company,  a  corporation 
of  this  State,  having  a  line  of  railroad  from  Easton, 
Pa.,  to  Perth  Amboy.  The  Lehigh  Valley  Railroad 
Company  is  a  miner  of  coal  to  some  extent,  and  pos- 
sesses a  railroad  Avhich  runs  through  the  anthracite 
coal  region  of  Pennsylvania,  and  affords  facilities  for 
transportation  of  coal  there  mined  to  markets  in  this 
and  adjoining  States. 

For  several  months  past  competition  between  these 
three  roads,  in  the  procuration  and  transportation  of 
coal,  and  between  each  of  them  and  the  Delaware, 


APPENDIX   IX.  231 

Lackawanna  and  "Western  Eailroad  Company,  tlie 
Delaware  and  Hudson  Canal  Company  and  the  Penn- 
sylvania Railroad  Company,  each  of  which  is  possessed 
of  interest  in  the  anthracite  coal  region  and  the  means 
of  transportation  of  coal  therefrom,  has  materially  re- 
duced the  price  of  coal  to  consumers  in  this  State  and 
elsewhere,  to  the  loss  of  considerable  profit  to  each  of 
the  companies  named,,  which  would  not  have  been  suf- 
fered if  competition  between  them  had  not  existed. 

It  further  appears  that  anthracite  coal  is  a  necessity 
to  the  people  of  Kew  Jersey,  being  the  fuel  that  is 
most  abimdantly  and  cheaply  obtainable  and  most 
universally  used  in  their  homes  and  manufactories. 

The  Philadelphia  and  Reading  Railroad  Company 
operates  in  this  State  among  other  railroads,  the  Dela- 
ware and  Bound  Brook  Railroad,  which  extends  from 
Bound  Brook  to  the  Delaware  River,  at  Yardleyville, 
a  few  miles  above  Trenton,  connecting  with  railroads 
to  the  anthracite  coal  region.  It  possessed  and  oper- 
ated this  road  prior  to  the  year  1890. 

On  the  .3d  of  November,  1890,  A.  A.  McLeod,  I.  A. 
Sweigard,  AVilliam  R.  Taylor,  D.  Jones,  Robert  S. 
Davis  and  John  Walker,  Jr.,  all  of  whom  were  offi- 
cers and  employees  of  the  Philadelphia  and  Reading 
Railroad  Company,  with  others,  organized  the  Port 
Reading  Railroad  Company,  under  the  general  rail- 
road law  of  this  State,  designating  in  the  certificate  of 
incorporation  its  capital  at  .$2,000,000,  divided  into 
20,000  shares  of  the  value  of  ^  100  each. 

The  Corporators  named  became  six  of  its  directors 
■s\dth  six  other  persons  who  were  also  connected  with 


232  INDUSTRIAL   COMBINATIONS. 

or  friendly  to  the  Philadelphia  and  Eeading  Eailroad 
Company.  The  real  business  office  of  the  company 
was  fixed  at  the  ofl&ce  of  the  Philadelphia  and  Read- 
ing Railroad  Company  in  the  city  of  Philadelphia,  and 
a  nominal  office,  to  comply  with  the  law  of  this  State, 
was  maintained  at  Kaighn's  Point  Ferry,  in  the  city 
of  Camden,  belonging  to  the  Philadelphia  and  Reading 
Company. 

On  the  same  day  that  this  railroad  company  was 
organized,  Albert  Foster,  James  K.  Landers,  W.  H. 
Blood,  F.  W.  Stone,  and  Charles  H.  Quarles,  under 
the  general  corporation  law  of  this  State,  formed  the 
Port  Reading  Construction  Company,  with  a  capital 
of  $  100,000,  divided  into  2,000  shares  of  the  value  of 
$  50  each.  The  incorporators  of  the  company  were 
all  officers  or  agents  of  the  Philadelphia  and  Reading 
Railroad  Company.  Forty  shares  of  the  stock,  in  all 
of  the  value  of  -f  2,000,  were  subscribed  for,  and  with 
that  amount  of  money  the  company  commenced  busi- 
ness. The  business  office  of  this  company  was  the 
office  of  the  Philadelphia  and  Reading  Railroad  Com- 
pany in  the  city  of  Philadelphia. 

Shortly  after  the  organization  of  these  two  companies 
under  the  general  laws  of  New  Jersey,  the  Port  Read- 
ing Construction  Company  contracted  with  the  Port 
Reading  Railroad  Company  to  build  its  railroad,  from 
a  point  in  the  Delaware  and  Bound  Brook  Railroad, 
to  a  point  on  the  Arthur  Kill,  opposite  Staten  Island, 
a  distance  of  20  miles,  for  1^1,500,000  in  mortgage 
bonds  of  the  Port  Reading  Railroad  Company  and  all 
the  capital   stock   of  the  latter  company,  save  400 


APPENDIX    IX.  233 

shares  which  had  been  subscribed  for  by  its  corpora- 
tors, the  proceeds  of  Avhich  subscription  were  paid  to 
the  State  treasurer  in  pursuance  of  the  requirements 
of  the  statute,  that  f  2,000  for  each  mile  of  road  to  be 
constructed  shall  be  deposited  with  the  treasurer  of  the 
State  at  the  time  of  the  organization  of  the  company. 

Previous  to  the  formation  of  these  companies  the 
riiiladelphia  and  Reading  Railroad  Company  had  pur- 
chased 300  acres  of  land  at  the  proposed  terminal  of 
the  Port  Reading  Railroad  upon  the  Arthur  Kill,  and 
after  the  organization  of  the  two  companies  this  land 
was  transferred  to  the  I'ort  Reading  Railroad  Coiu- 
pany. 

When  the  contract  for  the  construction  of  the  Port 
Reading  Railroad  was  executed,  a  mortgage  for 
$1,500,000  was  made  by  the  Port  Reading  Railroad 
Company  upon  its  property  and  franchises,  and  the 
bonds  secured  thereby  were  transferred  to  the  con- 
struction company,  and  that  company  thereafter  imme- 
diately commenced  to  procure  a  right  of  way  for  the 
railroad  comi)any  and  to  construct  its  road.  Tlic 
moneys  re(pnred  in  tlic  jirosecution  of  the  work  were 
had  by  loan  to  the  construction  comiJany  from  the 
riiiladt'lplii:!  und  Reading  Railroad  Company,  and  as 
well  when  tin-  I'.onds  of  the  Tort  Reading  Itailroad 
Company  could  be  negotiated  from  the  sale  of  them. 

In  the  ofHcial  re^jort  by  the  presidoit  of  tlic  I'liila- 
delphia  and  Reading  Railroad  Com})auy  to  tlic  stock- 
holders of  that  company,  for  the  year  ending  November 
30,  1890,  the  president  says  : — 

"  In  another  place  in  this  report  the  lack  of  means 


234  INDUSTRIAL  COMBINATIONS. 

of  placing  the  product  of  your  mines  upon  the  markets, 
and  the  consequent  shrinkage  of  production  in  propor- 
tion to  that  of  competing  fields,  is  commented  upon. 
A  marked  illustration  of  the  necessity  of  providing 
additional  facilities  for  the  distributing  of  anthracite 
coal  in  New  York  Harbour  and  all  tide-water  points 
tributary  thereto  is  found  in  the  fact  that  at  the  time 
of  writing  this  report  there  are  more  than  1,000  cars 
loaded  with  coal  standing  on  the  side  tracks  in  Jersey 
City,  because  of  the  lack  of  dock  facilities  for  trans- 
ferring coal  to  vessels,  and  on,  account  of  the  restriction 
which  these  limitations  impose  upon  your  traffic,  the 
management  is  now  obliged  to  transport  coal  from 
Port  Richmond  through  the  Delaware  Eiver  and 
around  New  York  Harbour,  encountering  all  the  perils 
of  coast  navigation  at  this  season  of  the  year  and  at 
an  expense  largely  in  excess  of  all-rail  freights. 

''With  the  view  to  meeting  these  wants  and  other 
disabilities  under  which  your  company  has  laboured 
ever  since  the  day  it  opened  its  mines,  for  want  of 
unrestricted  access  to  the  waters  of  New  York  Bay, 
the  greatest  distributing  centre  in  the  country  of 
anthracite  coal,  your  board  has  determined  to  promote 
the  construction  of  a  line  of  road,  to  be  under  the 
control  of  your  company,  to  extend  from  the  vicinity 
or  the  terminus  of  the  Boimd  Brook  Railroad  near 
Bound  Brook,  N.  J.,  to  deep  water  in  Arthiu-  Kill,  a 
distance  of  20  miles,  at  a.  point  readily  accessible  to 
the  waters  of  New  York  Bay  and  New  England  ports 
by  large  vessels.  Plans  have  been  completed  for  the 
construction  of  this  line,  with  adequate  terminals  for 


APPENDIX   IX.  235 

tlie  storage  and  shipment  of  coal  in  quantities  limited 
only  by  the  demands  of  the  market.  Over  300  acres 
of  land  have  been  acquired  for  terminal  purposes, 
bordering  on  the  waters  of  the  Arthur  Kill.  Work 
will  be  speedily  commenced  and  prosecuted  with  vigour. 
Conservative  estimates  show  that  the  earnings  of  this 
line  will  be  sufficient  to  meet  all  charges  on  its  cost 
and  leave  a  large  surplus ;  it  will  furnish  the  means 
of  su])})lying  the  markets  with  your  proportion  of  the 
coal  tonnage  at  all  times. 

"The  advantage  of  the  construction  of  this  line  in 
the  increase  of  tonnage  on  nearly  all  otliQr  parts  of 
the  system,  without  regarding  the  increase  of  product 
of  the  coal  and  iron  company,  can  scarcely  be  esti- 
mated, but  it  is  certain  that  it  will  add  a  large  increase 
of  traffic  earnings.  It  was  anticipated  that  Avork  on 
this  line  could  have  been  commenced  before  this  time, 
but  it  was  found  necessary  to  make  several  surveys  in 
order  to  avoid  all  grade  crossings  of  other  railroads, 
and  your  board  is  pleased  to  announce  that  the  line 
ado])t(Hl  is  of  favf)ural)le  grades  and  of  almost  perfect 
alignment,  the  maximum  grade  being  only  15  feet  to 
the  mile." 

On  the  12th  of  January.  1892,  while  the  Port  Read- 
ing Kailroad  Company  was  yet  incomplete,  only  a  few 
miles  of  a  single  track  having  been  laid  iiiKin  an  uniin- 
isliod  road-bed,  and  it  was  without  rolling  stock  of  any 
kind,  or  depots,  and  its  stock  and  bonds  were  substan- 
tially all  in  the  hands  of  the  Port  Reading  Construc- 
tion Company,  the  Central  Railroad  Company  of  X(>\v 
Jersey  entered  into  a  lease  with  it,  whereby  it  trans- 


230  INDUSTUIAL   COMBINATIONS. 

ferred  to  it  for  nine  liundred  and  ninety-nine  years  its 
entire  railroad,  together  witli  the  right  to  maintain 
and  operate  more  than  forty  tribntary  railroads,  which 
it  controlled  by  leases  or  throngh  the  ownership  of  the 
majority  of  capital  stock,  together  with  all  laterals, 
extensions,  sidings,  turnouts,  tracks,  bridges,  viaducts, 
culverts,  rights  of  way,  water  rights  and  privileges, 
lands,  shops,  machinery,  fixtures,  depots,  passenger, 
freight,  and  water  stations,  houses,  buildings,  struct- 
ures, improvements,  tenements,  and  hereditaments  of 
whatever  kind  or  description  and  wherever  situate, 
appertaining  to  the  operation,  maintenance,  and  re- 
newal of  said  railroads  which  where  then  laid,  leased, 
or  owned  by  the  Central  Railroad  Company,  or  which 
at  any  time  thereafter,  during  the  term  of  the  lease, 
might  be  acquired  by  that  company  for  railroad  pur- 
poses. Together  also  with  all  its  ferries  and  rights 
of  ferriage  then  belonging  or  thereafter  to  be  acquired 
by  it,  and  all  the  stationary  and  locomotive  engines, 
and  the  cars,  tenders,  trucks,  and  other  rolling  stock 
of  the  company,  tools,  implements,  machines,  and 
personal  property  of  every  kind  and  description  in 
use,  or  intended  or  adapted  for  use  upon  or  aboiit  the 
railroads  and  premises  demised,  or  the  business  thereof ; 
and  also  the  rights,  powers,  and  franchises  (other  than 
the  franchise  of  being  a  corporation)  and  all  the  privi- 
leges which  then,  or  at  any  time  thereafter  during  the 
term  of  the  lease,  might  be  lawfully  exercised  and 
enjoyed  by  it  touching  the  premises  demised,  includ- 
ing all  rights  in  telegraph' lines  upon  the  railroad  or 
the  several  branches  thereof.     The  Central  Company 


APPENDIX   IX.  237 

reserved  to  itself  its  office  building  in  the  City  of  New 
York,  known  as  the  ''  Central  Building,"  and  lauds 
owned  by  it  which  are  not  adjacent  to  the  railroad,  or 
if  adjacent  and  not  in  railroad  use ;  provided,  how- 
ever, if  the  last  mentioned  lands,  or  any  of  them, 
should  be  subsequently  needed  by  the  lessee,  they 
also  would  be  surrendered. 

The  Port  Reading  Railway  Company  covenanted  to 
pay  the  Central  Railroad  Company,  annually,  enough 
money  to  enable  it  to  pay  its  fixed  charges  and  7  per 
cent,  upon  its  ca})ital  stock  then  issued,  and  such  capi- 
tal stock  as  should  be  issued  thereafter  under  specified 
circumstances,  and  also  pay  it  50  per  cent,  of  the  les- 
sor's earnings  through  the  instrumentalities  of  the  rail- 
ways of  the  Central,  in  excess  of  the  fixed  charges  and 
7  per  cent,  upon  the  capital  stock,  up  to  3  per  cent, 
upon  the  outstanding  capital  stock  of  the  Central. 
And  also  agreed  to  pay  the  taxes  wliich  should  be 
assessed  upon  the  capital  stock  and  dividends  of  the 
Central,  to  keep  the  premises  demised  in  repair,  to 
insure  the  property,  to  save  the  ('entral  harmless  from 
all  damages  by  reason  of  the  operation  of  its  road  or  by 
reason  of  any  failure  in  the  performance  of  the  duties 
required  of  it,  and  to  provide  and  nuuntain  terminals, 
stations,  repair  shops,  and  e(piii)ments  and  nuuntain 
rolling  stock  and  tools  ecpial  to  the  rolling  stock 
delivered  to  it,  so  marked  as  to  identify  them,  liet-- 
terments  were  to  be  nuide  by  the  Central  Railroad 
Comi)auy ;  if  it  pleased,  it  was  to  have  5  per  cent, 
anniially  upon  the  moneys  it  should  pa}^  for  th»'  bet- 
terments and  was  to  be  permitted  to  mortgage  tlie 


238  INDUSTRIAL  COMBINATIONS. 

demised  property  to  secure  the  repayment  of  moneys 
it  should  borrow  to  enable  it  to  make  them. 

The  Port  Reading  also  agreed  to  keep  accounts 
which  should  be  open  to  the  Central's  inspection  and 
to  perform  all  the  Central's  existing  contracts  relating 
to  the  demised  premises ;  also  to  procure  traffic  over 
the  Lehigh  and  Susquehanna  Railroad  to  a  specified 
amount.  It  covenanted  that  it  would  not  divert  nor 
permit  the  diversion  from  the  Central  of  the  Central's 
then  traffic  or  of  any  traffic  which  should  thereafter  be 
naturally  tributary  to  it,  but  that  it  would  foster  and 
strive  to  increase  traffic  and  the  earnings  of  traffic 
over  the  Central's  road  and  the  earnings  of  that  road. 
It  also  covenanted  that  individual  coal  miners  on  the 
line  of  the  Central's  roads  should  have  transportation 
for  their  coal  without  discrimination  against  them ; 
that  cars  and  transportation  should  be  furnished  to  all 
coal  miners  who  should  be  naturally  tributary  to  the 
Central's  system,  and  that  the  rates  charged  for  trans- 
portation should  be  as  low  as  the  rates  charged  at  any 
time  for  similar  transportation  by  the  Philadelphia 
and  Reading  Railroad  Company  from  the  Schuylkill 
region.  All  the  stocks  of  various  companies  owned 
by  the  Central  Company  were,  so  far  as  concerned  cor- 
porations, included  within  the  lease,  to  remain  the 
property  of  the  Central  Company,  and  be  used  by  it  to 
enable  the  Port  Reading  Company  to  control  those  cor- 
porations. The  lease  was  not  to  be  assigned  without 
the  Central  Railroad  Company's  consent.  It  was  to 
take  effect  as  of  Jamiary  1,  1892,  and  the  right  of 
re-entry  was  secured  to  the  Central  iu  case  of  any 


APPENDIX  IX.  239 

default  upon  the  part  of  tlie  Port  Reading  Eailroad 
Company  iu  the  performance  of  its  undertaking. 

Upon  the  same  day  that  this  lease  was  executed, 
a  tripartite  agreement  between  the  Central  Eailroad 
Comi)any,  the  Port  Reading  Railroad  Company,  and 
the  Philadelphia  and  Reading  Railroad  Company,  in 
which  the  lease  just  referred  to  was  incorporated,  was 
entered  into.  This  agreement  recited  that  the  lines 
operated  by  the  three  railroad  companies  were  con- 
nected in  New  Jersey  and  Pennsylvania  and  form 
continuous  lines ;  also  that  the  Central  Railroad  Com- 
pany was  willing  to  lease  to  the  Port  Reading  Com- 
pany if  the  Philadelphia  and  Reading  would  guarantee 
the  performance  of  the  Port  Reading's  covenants  in 
the  proposed  lease ;  that  the  Port  Reading  was  willing 
to  lease  if  the  Philadelphia  and  Reading  would  insure 
the  increase  of  traffic  that  the  lease  ('ontom])lated, 
and  the  Pliiladdpliia  and  Reading  was  willing  to 
guarantee  the  lease  because  of  the  advantage  it  would 
have  in  the  terminals  of  the  Central  Railroad  and  in 
the  interchange  of  traffic  Avith  it. 

And  it  was  thereupon  agreed  that  the  lease  should 
be  executed ;  that  the  consent  of  the  stockholders  of 
the  Central  and  Port  Reading  Companies  to  the  lease 
should  be  procured  as  counsel  of  the  Philadelphia  and 
Reading  Company  should  instruct;  that  possession  of 
the  (l(')iiised  premises  sliould  be  immediately  given; 
that  the  payments  to  be  made  by  the  Port  Reading 
Company  and  the  covenants  to  be  performed  l)y  it 
were  guaranteed  by  the  I*hiladel])hia  and  Reading 
Company;  that  the  Philadelphia  and  Reading  would 


2-10  INDUSTRIAL   COMBINATIONS. 

make  the  payment  if  the  Port  Reading  should  not 
make  them,  and  that  it  woukl  cause  the  Port  Reading 
to  perform  its  covenants ;  that  the  Port  Reading  Com- 
pany should  provide  or  procure,  at  Jersey  City,  and 
in  New  York  and  Brooklyn,  and  on  the  Arthur  Kill, 
terminal  facilities  for  the  Philadelphia  and  Reading 
traffic,  the  Central  Railroad  Company  having  the 
privilege  to  provide  such  facilities,  except  at  the 
Port  Reading's  terminal  on  the  Arthur  Kill,  as  bet- 
terments ;  that  the  traffic,  which  would  thereafter 
naturally  go  to  the  Central  as  its  direct  route,  should 
be  secured  to  that  road ;  that  coal,  naturally  tributary 
to  the  Central,  should  go  over  it  for  as  long  a  distance 
as  possible  ;  that  coal,  naturally  tributary  to  the  Phila- 
delphia and  Reading,  which  was  destined  to  the  New 
York  Harbour,  north  of  Elizabeth,  should  go  over  the 
Central's  road,  at  least,  from  Bound  Brook  Junction ; 
that  coal,  for  delivery  on  line  of  the  Central's  road, 
from  mines  tributary  to  it,  should  go  over  the  Central, 
or  in  event  of  its  not  going  over  the  Central,  that  an 
equivalent  for  the  loss  of  the  freight  rates  should  be 
credited  in  the  Central's  account;  that  traffic  on  the 
Easton  and  Amboy  Railroad  and  upon  other  Lehigh 
Valley  lines,  destined  to  the  Central  terminals,  should 
go  over  the  Central  at  least  as  far  as  from  Roselle 
Junction  to  the  terminal;  that  other  traffic,  as  then 
interchanged,  should  be  continued  to  interchange  ;  that 
the  Port  Reading  and  the  Philadelphia  and  Reading 
would  maintain  the  present  traffic  of  the  Central  and 
increase  it ;  that  the  Philadelphia  and  Reading  would 
put  $  2,000,000  of  securities  in  trust  to  secure  its  per- 


APPENDIX   IX.  "241 

formance  of  the  agreement;  that  in  case  of  a  termi- 
nation of  the  lease  and  agreement,  the  Central  shall 
have  an  interest  equal  to  the  Reading  in  the  Central, 
New  England  and  Western  Railroad  Company,  and  in 
the  Poughkeepsie  Bridge  Company  npon  its  paying  to 
the  Reading  one-half  its  expenditure  for  the  Read- 
ing's interest,  and  assuming  a  due  proportion  of  the 
obligations  assumed  by  the  Reading  in  securing  that 
interest. 

The  agreement  of  guarantee  and  assurance  of  traffic 
was  to  continue  as  long  as  the  lease  should  last,  and 
in  case  the  lease  should  be  forfeited,  the  agreement 
should  then  be  void.  The  lease  was  executed  upon  the 
part  of  the  Port  Reading  Railroad  Company  by  A.  A. 
McLeod,  its  president,  and  William  R.  Taj'lor,  its  secre- 
tary, and  the  agreement  of  guarantee  and  assurance 
was  also  executed  by  those  gentlemen  as  president  and 
secretary  respectively,  not  only  of  the  Port  Reading 
Railroad  Conqtany,  but  also  the  Philadelphia  and 
Reading  Railroad  Company. 

On  the  8th  of  April,  1892,  the  board  of  directors  of 
the  Central  Railroad  Comi)any  reported  to  the  stock- 
holders of  that  company  that  their  railnjads  were  then 
being  operated  by  the  Port  Reading  Railroad  Company. 
Commenting  upon  the  advantages  of  the  lease  and 
agreement,  this  rejjort  says  : 

"  It  is  intended  to  secure  for  your  railroad  its  pres- 
ent traffic  and  its  natural  growth  and  development, 
and,  in  addition,  by  the  guarantee  of  common  interest, 
the  ])enetit  of  wliatever  traffic  is  controlled  and  inHu- 
enced  by  the  Reading  system  and  is  naturally  tributary 

R 


242  INDUSTRIAL  COMBINATIONS. 

to  your  road  and  terminals.  It  prevents  a  diversion  of 
traf&c  which  might  otherwise  have  resulted  from  the 
lease  of  the  Lehigh  Valley  Railroad  by  the  Philadel- 
phia and  Reading  Company. 

"It  is  fair  to  expect,  as  the  further  results  of  this 
alliance,  with  the  co-operation  of  other  large  coal-pro- 
ducing companies,  greater  uniformity  in  the  prices  of 
coal,  steadier  employment  for  the  labouring  classes  in 
the  coal  regions,  the  avoidance  of  needless  and  expen- 
sive competition  between  producers  and  the  establish- 
ment of  economies  which,  without  undue  burden  to 
consumers,  will  bring  to  the  stockholders  adequate 
returns  for  their  capital. 

"In  both  the  lease  and  traffic  contracts  every  safe- 
guard had  been  provided  for  the  preservation  and 
development  of  your  property. 

"  The  independent  organization  of  the  Central  Rail- 
road Company  will  be  maintained  to  discharge  its 
obligations  directly  to  the  stockholders  and  bondhold- 
ers, as  well  as  to  see  that  the  provisions  of  the  agree- 
ment are  observed  and  the  maximum  rentals  thereby 
secured." 

The  testimony  of  Mr.  A.  A.  McLeod,  who  was  presi- 
dent of  both  the  Philadelphia  and  Reading  and  the 
Port  Reading  Companies  when  the  lease  and  tripartite 
agreements  were  executed,  has  been  put  in  the  case 
upon  the  part  of  the  informant.  In  it  Mr.  McLeod 
states,  among  other  things,  that  the  lease  does  not  put 
it  in  the  power  of  the  Philadelphia  and  Reading  road  to 
raise  or  lower  the  price  of  coal  without  the  co-operation 
of  other  coal  carriers,  but  that  it  will  possibly  facilitate 


APPENDIX   IX.  243 

such  co-operation.  It  "svould  itself,  he  says,  iiudoiibt- 
edly  affect  prices  of  coal  at  some  points. 

In  point  of  fact  the  price  of  coal  has  risen  at  several 
places  in  New  Jersey  since  the  lease  and  agreement 
were  made.  Whether  this  is  attributable  to  the  lease 
does  not  distinctly  appear,  but  it  is  quite  clear  that  it 
is  the  purpose  of  the  coal  companies  in  which  the  rail- 
roads involved  are  interested  to  demand  a  greater  price 
for  the  coal  they  sell. 

While  the  facts  above  recited  remain  admitted  or 
uncontroverted,  the  answers  deny  that  the  defendants, 
or  either  of  them,  own  any  coal  lands,  or  mine  or  sell 
any  coal,  and  also  that  they,  acting  either  separately 
or  conjointly,  can  fix  or  increase  the  price  of  anthracite 
coal,  or  create  a  mono})oly  in  the  business  of  mining  or 
selling  anthracite  coal,  or  put  an  end  to  competition  in 
the  price  or  sale  of  coal.  .  .  . 


244  INDUSTRIAL   COMBINATIONS. 


APPENDIX  X. 

DISTILLING  AND   CATTLE   FEEDING  CO. 

A.     REBATE   VOUCHERS. 

Peoria,  III.,  ,  189     .     No.  . 

Subject  to  the  cond.ition.s  named  herein,  and  for  the 
purpose  of  securing  the  continuous  patronage  of  the 
within-named  purchaser,  the  successors  and  assigns  of 
the  same,  for  its  products,  the  Distilling  and  Cattle 
Feeding  Co.,  six  months  from  the  date  of  this  purchase 

voucher,  will  pay  to of purchaser, 

dollars,  ($ )  being  a  rebate  of  seven  cents  per 

proof  gallon  on proof  gallons  of  the  Distilling 

and  Cattle  Feeding  Company's  product  purchased  this 
day.  This  voucher  will  be  valid  and  payable  only  upon 
condition  that  the  above-named  purchaser,  the  suc- 
cessors and  assigns  of  the  same,  from  the  date  of  this 
voucher  to  the  time  of  its  payment,  shall  have  bought 
their  supply  of  such  kinds  of  goods  as  are  produced 
by  the  Distilling  and  Cattle  Feeding  Company,  and  all 
compounds  thereof,  exclusively  of  one  or  more  of  the 
dealers  named  on  the  back  hereof,  until  further  noti- 
fied, and  shall  also  have  subscribed  to  the  certificate 
on  the  back  hereof. 


APPENDIX   X. 


245 


When  clue,  forward  to  the  German  American  Na- 
tional l>ank  of  Peoria,  111.,  where  this  voucher  is  pay- 
able without  exchange  or  other  charge. 

DISTILLING   AND   CATTLE    FEEDING   CO., 
By  J.  B.  GREENHUT,    President. 

(Stamped  across  the  face.)  42  Not  transferable 
or  negotiable. 


No 

Date 189  . 

Name 

Location 

Proof  gallons 
Amount  of  Rebate 


Proof  gallons. 


Amount. 


It  is  hereby  certified  that  from  the  date  of  this 
voucher  to  the  maturity  thereof  the  within-naiued 
piircliasor  and  the  successors  and  assigns  of  the  same 
have  i)urchased  all  of  their  supply  of  sucli  kind  of 
goods  and  their  compounds  as  are  produced  liy  the 
1  )istilling  and  Cattle  Feeding  Co.,  exclusively  fiom  (nie 
or  more  of  the  dealers  named  hereon. 


Dated 


James  A.  Webb  &  Son New  York,  N.  Y 

Curtiss  &  Co "  " 


246  INDUSTRIAL   COMBINATIONS. 

Thomas  B.  Kerr New  York,  N.  Y. 

Ross  &  Keaney "  " 

J.  L.  Hasbrouck  &  Co "  " 

Eastern  Distilling  Co.  and  Ridgewood  Re- 
Distilling  Co "  " 

Geo.  W.  Kidd  &  Co "  " 

E.  N.  Cook  &  Co Buffalo,  " 

Columbia  Distilling  Co Albany,  " 

H.  &  H.  Reiners Brooklyn,       " 

Carstairs,  McCall  &  Co Philadelphia,  Pa. 

Dougherty  &  Downs "  " 

Nicholas  J.  Griffin "  " 

R.  J.  Allen,  Son  &  Co "  " 

Charles  S.  Hahs "  " 

Boyle  &  McGlynn "  " 

Beattie  &  Hay "  " 

Empire  Distilling  Co Boston,  Mass. 

D.  T.  Mills  &  Co "  " 

A.  L.  Webb  &  Son Baltimore,  Md. 

James  Walsh  &  Co Cincinnati,  Ohio. 

Maddux,  Hobart  &  Co "  " 

Millcreek  Distilling  Co "  " 

Union  Distilling  Co "  " 

Hoffheimer  Bros "  " 

Elias  Block  &  Sons "  " 

Freiberg  &  Workum "  " 

The  Old  '76  Distilling  Co "  " 

W.  W.  Johnson  &  Co "  " 

Henry  W.  Smith  &  Co "  " 

Hirsch,  Loewenstein  &  Levi "  " 

Fleischmann  &  Co "  " 

W.  L.  Weller  &  Sons Louisville,  Ky. 

Terre  Haute  Distilling  Co Terre  Haute,  Ind. 

Chicago  Distilling  Co Chicago,  111. 

United  States  Distilling  Co "  " 

Abel,  Ames  &  Co "         " 

Empire  Distilling  Co "         •' 


APPENDIX  X.  247 

The  Eiverdale  Distillery Chicago,  111. 

Henry  H.  Shiifeldt  &  Co 

The  Calumet  Distillery "  " 

Corning-  &  Co Peoria,      " 

H.  Schwabacher "  " 

John  Meiners  &  Son Milwaukee,  Wise. 

National  Distilling  Co "  " 

The  St.  Paul  Distillery South  St.  Paul,  Minn. 

Mound  City  Distilling  Co St.  Louis,  Mo. 

Teu.scher  &  Co "  " 

Kansas  City  Distilling  Co Kansas  City,  Mo. 

Her  &  Co Omaha,  Nebr. 

Lilienthal  &  Co San  Francisco,  Cal. 

C.  W.  Craig 

Jones  Mundy  &  Co "  " 

J.  &  A.  Freiberg Cincinnati,  Ohio. 

Mihalovitch,  Fletcher  &  Co "  " 

Kheimstroni  Bros "  " 

The  Cook  &  Bernheimer  Co New  York,  X.  Y. 

C.  H.  Graves  &  Sons Boston,  l\Iass. 

Thos.  E.  O'Keefe Oswego,  N.  Y. 

The  Wm.  Bergenthal  Co.    . Milwaukee,  Wis. 


248 


INDUSTRIAL  COMBINATIONS. 


APPENDIX   Xa. 

Daily  statement  of  Distilling  and  Cattle  Feeding 
Company's  rebate  vouchers  issued  on  its  product  sold  this 
day  of 189-  by ,  of . 


No.  of 

PUBCHASER. 

Leave  blank 

for  rebate 

office. 

Proof 
gallons. 

Amount 

voucher. 

Name. 

Location. 

rebate. 

Total 

APPENDIX   XI.  249 


APPENDIX   XI. 

AGREEMENT    FOR    THE    REORGANIZATION 
OF  THE  AMERICAN  COTTON  OIL  TRUST. 

This  Agreement,  made  this  sixth  clay  of  November, 
1889,  by  and  between  Frederic  P.  Olcott,  Samuel 
Thomas,  Edward  D.  Adams,  Nicholas  Sheldon,  James 
H.  Renedict  and  William  L.  Bull,  a  Committee  of  the 
Certificate  holders  of  The  Ameri(-an  C-otton  Oil  Trust, 
hereinafter  called  The  Committee,  parties  of  the  first 
part ;  and  such  of  the  (certificate  holders  of  the  said 
The  American  Cotton  Oil  Trust  as  shall  become  parties 
to  this  Agreement,  parties  of  the  second  part ;  and  The 
Central  Trust  Company  of  New  York  as  Depositary, 
party  of  the  third  part ;  AV'itnesseth  : 

Whereas,  The  American  Cotton  Oil  Trust  Avas 
heretofore  created  under  and  by  virtue  of  an  Agree- 
ment or  Deed  of  Trust,  and  tlicre  liave  been  issued 
tliereunder  Trust  Certificates  now  outstanding  to  the 
amount  of  $42,185,2.38; 

And  wiiekeas.  It  is  the  desire  and  i)urpose  of  the 
])arties  hereto  to  effect  a  reorganization  of  The  Ameri- 
can Cotton  Oil  Trust  by  the  merger  and  incorpoiatidn 
of  tlie  Trust  and  tlic  luoix-rty  and  assets  thereof,  in 
wliole  or  in  ]>art,  into  Tlie  American  Cotton  Oil  Ciuii- 
pany,  a  corporation  organized  and  existing  uniler  tlie 


250  INDUSTRIAL   COMBINATIONS. 

laws  of  the  State  of  New  Jersey,  or  that  such  Trust 
Certificates  be  sold,  exchanged  or  transferred  directly 
for  shares  of  said  Company,  or  that  such  other  method 
or  plan  be  adopted  as  may  be  considered  by  said  Com- 
mittee calculated  to  accomplish  the  following  general 
result  and  basis,  viz. : 

GENERAL  BASIS   OF  REORGANIZATION  OF  THE 
AMERICAN   COTTON   OIL   TRUST. 

The  American  Cotton  Oil  Company  to  issue  Six  per 
cent.,  Xon-cumulative  Preferred  Stock,  redeemable  at 
lOo  per  cent.,  secured  by  the  shares  of  all  companies 
received  on  such  merger  or  acquisition,  or  by  property 
or  Trust  Certificates,  as  may  be  determined  by  the 
Committee,  and  limited  to  $  15,000,000  in  amount  — 
$4,454,000  thereof  (or  any  balance  in  excess  of  the 
amount  required  on  the  exchange)  to  be  held,  used 
and  disposed  of  by  the  Directors  for  the  purposes  of 
the  Company ;  and  Common  Stock  to  the  amount  of 
$21,092,000.  All  such  stock  to  be  entitled  to  like 
voting  power. 

The  American  Cotton  Oil  Trust  Certificates  to  be 
exchanged  for  such  shares  in  the  following  proportion, 
viz. : 

Yov  each  share  of  Trust  Certificates, 
50  per  cent,  thereof  in  such  Common 
Stock $21,092,000 

And  25  per  cent,  thereof  in  such  Pre- 
ferred Stock   $10,546,000 

Kow,  THEREFORE,  in  Consideration  of  the  si;m  of 
one  dollar  each  to  the  other  in  hand  paid,  and  of  their 


APPENDIX   XT.  251 

mutual  agreement,  and  of  otlier  valuable  consideration, 
the  receipt  whereof  is  hereby  acknowledged,  the 
parties  hereto,  and  such  other  certificate  holders  as 
shall  come  in  and  participate  luider  the  terms  of  this 
Agreement,  either  by  executing  the  same,  or  by  de- 
positing their  Certificates  hereunder,  hereby  mutually 
covenant  and  agree  (each  for  himself  and  not  for  the 
other),  to  and  with  each  other,  and  with  the  said  Com- 
mittee, parties  of  the  first  part,  and  with  said  Central 
Trust  CJompany,  party  of  the  third  part,  as  follows  : 

I.  That  they  are  the  owners,  or  legal  or  personal 
representatives  of  the  owners,  of  Certificates  of  The 
American  Cotton  Oil  Trust,  to  the  amounts  set  oppo- 
site their  respective  names,  or  deposited  hereunder 
respectively;  and  that  they  will  in  all  cases  deposit 
said  Certificates  owned,  or  represented  by  them,  or 
either  of  them,  in  good  faith,  on  or  before  the  twen- 
tieth day  of  November,  1889  (or  within  such  further 
period  as  may  be  granted  by  said  Committee),  with 
the  Central  Trust  Company  of  the  City  of  New  York, 
which  is  hereby  designated  as  the  Dejjositary  of  said 
Committee  for  said  purpose,  and  that  they  will  respec- 
tively accept  in  lieu  thereof  negotiable  Certificate  or 
Certificates  of  Deposit  of  said  Central  Trust  Company, 
issued  in  such  form  as  may  be  approved  by  tlie  Com- 
mittee; and  that  they  and  each  of  tliem  will  in  all 
cases  execute  legal  and  sutficient  transfers  of  their 
Trust  Certificates  to  the  Committee,  ]iarties  of  the 
first  part,  and  dejjosit  the  same  with  their  said  Trust 
(/crtificates,  so  that  the  legal  title  to  said  Trust  Cer- 
tificates shall  be  and  become  vested  in  saiil  Committee, 


252  INDUSTRIAL   COMBINATIONS. 

for  the  use  and  subject  to  the  control  of  said  parties 
of  the  first  part,  or  a  majority  of  them,  or  their  suc- 
cessors, as  such  Committee ;  provided,  however,  that 
if  any  holders  of  American  Cotton  Oil  Trust  Certifi- 
cates shall  fail  to  surrender  and  transfer  their  said 
Trust  Certificates  in  accordance  herewith,  or  in  any 
other  respect  fail  to  comply  with  the  terms  of  this 
Agreement,  they  and  each  of  them  shall,  from  and 
after  such  omission  or  failure,  have  no  right  to  par- 
ticipate in  the  benefits  of  this  Agreement,  without  the 
express  consent  of  said  Committee. 

By  the  acceptance  of  such  Certificates  of  Deposit 
above  referred  to,  the  several  parties  of  the  second 
part  respectively  depositing  their  American  Cotton 
Oil  Trust  Certificates  with  said  Central  Trust  Com- 
pany, become  parties  to  this  Agreement  with  the  same 
force  and  effect  as  if  they  had  severally  affixed  their 
signatures  and  seals  at  the  foot  of  this  instrument. 

II.  The  assenting  stockholders  hereby  constitute 
the  Committee,  said  parties  of  the  first  part,  and  their 
successors  and  substitutes,  as  their  Committee,  Trus- 
tees and  Agents  to  carry  out  the  general  plan  of 
reorganization  above  generally  set  forth,  in  such  man- 
ner, and  by  such  methods,  means  and  proceedings,  as 
in  their  judgment  may  seem  advisable ;  to  possess  and 
exercise  all  the  title,  interests,  rights,  powers  and 
privileges  of  such  certificate  holders  appertaining  to 
such  Certificates  under  the  Deed  of  Trust,  or  other- 
wise, including  the  power  and  right  to  vote  and  act 
(either  in  person  or  by  proxy)  at  any  and  all  meetings 
of  certificate  holders  of  said  Trust  upon  any  measure 


APPENDIX   XI.  253 

or  subject,  whether  previovis  notice  thereof  be  given 
or  not,  and  to  assent  to,  act  upon  and  co-operate  in  the 
dissohition  and  winding  up  of  said  Trust,  and  the 
transfer  and  sale  of  any  or  all  the  assets  thereof  —  all 
in  such  manner  and  upon  such  considerations  as  they 
deem  best ;  and  to  prescribe  the  form  and  provisions 
of  such  Preferred  and  Common  Stock  Certificates,  and 
determine  with  what  shares,  property  or  Trust  Cer- 
tificates such  Preferred  Stock  shall  be  secured  and  the 
manner  thereof. 

Also  to  prosecute  or  defend  any  and  all  legal  pro- 
ceedings which  said  certificate  holders  personally,  or 
any  of  them,  could  have  instituted,  conducted  or  be 
parties  to,  and  for  any  of  the  purposes  or  ends  for 
which  such  certificate  holders  might  have  instituted 
or  conducted  the  same ;  to  employ  and  determine 
compensation  of  such  assistants,  agents,  attorneys  and 
counsel  and  inciir  such  other  expenses  for  advertising, 
printing  and  otherwise,  as  they  may  deem  necessary 
for  the  accomplishment  of  the  puri)oses  herein  gener- 
ally expressed ;  and  in  general  to  devise  and  execute 
means  for  the  reorganization  of  said  Trust,  and  to  do 
and  perform  each  and  every  act  which  they  may  deem 
necessary  or  desirable  to  consummate  such  reorganiza- 
tion, and  the  general  purposes  jicrcinbefore  recited, 
and  full  discretion  is  conferred  uiion  them  in  the 
premises. 

It  is  exin'cssly  jtrovided  and  agreed,  that  such  Com- 
mittee sliall  not  lie  confined  to  any  single  method  of 
accomplishing  the  conversion  of  such  Trust  Certificates 
into  shares  of  said  corporation,  but  shall  have  and  is 


254  INDUSTIIIxVL   COMBINATIONS. 

hereby  giveii  plenary  power  and  discretion  to  bring 
about  such  result  by  suck  method  and  in  such  manner 
as  they  may  consider  practicable  and  advantageous  to 
the  certificate  holders;  and  that  the  enumeration  of 
specific  powers  anywhere  in  this  Agreement  shall  not 
be  construed  to  limit  or  restrict  the  general  powers 
herein  mentioned. 

III.  Said  Committee  shall  have  power  to  add  to 
their  number  from  time  to  time,  to  such  limit  as  they 
deem  judicious,  and  to  fill  any  vacancy  which  may 
arise  in  the  Committee  by  death,  resignation  or  other- 
wise. They  shall  select  of  their  number  a  Chairman 
and  Secretary,  who  shall  perform  the  duties  usually 
appertaining  to  such  offices.  They  shall  be  and  are 
hereby  empowered  to  act  in  all  respects  and  upon  all 
questions  and  matters  by  the  affirmative  vote  of  a 
majority  of  their  number ;  and  all  the  interests, 
rights,  duties,  powers  and  discretion  herein  conferred 
iipon  the  parties  of  the  first  part,  shall  extend  to  and 
be  possessed  and  exercised  by  any  successor,  substi- 
tute or  additional  member  of  said  Committee  as  fully 
as  if  such  person  or  persons  had  been  originally 
named  herein.  They  shall  have  power  to  nominate 
and  appoint  an  agent,  agents  or  sub-committee,  through 
whom  they  may  act,  and  they  may  delegate  any  neces- 
sary authority  as  well  as  discretion  to  such  agent, 
agents  or  sub-committees. 

IV.  This  Agreement,  and  all  the  provisions  thereof, 
shall  be  binding  upon  all  parties  hereto,  and  depositors 
of  Certificates  hereunder,  and  shall  be  carried  out 
without  regard   to   any   fixed   proportion  or  amount 


APPENDIX  XI.  255 

of  Trust  Certificates  that  may  be  deposited  here- 
under. 

The  Committee  shall  be  the  sole  judge  as  to  whetlier 
the  assent  of  the  holders  of  such  American  Cotton  Oil 
Trust  Certificates  has  been  obtained  to  this  Agreement 
sufficient  in  amount  to  warrant  them  in  carrying  out 
the  same ;  and  they  shall  have  power,  and  it  shall  be 
their  duty,  to  execute  and  consummate  any  such  plan, 
and  the  provisions  of  this  Agreement,  for  and  in 
behalf  of  such  holders  as  may  become  parties  hereto, 
and  without  any  regard  to  any  fixed  proportion  or 
amount  of  such  Certificates ;  and  this  Agreement  shall 
continue  in  full  force  and  effect  until  all  of  its  pur- 
poses and  provisions  are  accomplished ;  provided, 
however^  that  said  Committee,  in  their  absolute  dis- 
cretion and  judgment,  may  at  any  time  and  at  any 
stage  of  their  duties,  bring  this  trust  in  whole  or  in 
part  to  a  close,  wind  up  the  same  in  whole  or  in  part, 
and  distribute,  pro  rata,  among  the  holders  of  such 
Central  Trust  Certificates,  the  shares,  certificates  or 
other  property  that  may  be  in  their  hands  at  the  time. 

V.  And  it  is  expressly  agreed  that,  if  said  Commit- 
tee should  consider  it  preferalale,  for  any  reason  or 
cause,  so  to  do,  they  are  specifically  authorized  and 
empowered  to  sell  and  dispose  of,  from  stage  to  stage, 
and  at  any  time  or  times,  all  or  any  part  of  the  Ameri- 
can Cotton  Oil  Trust  Certificates  deposited  hereunder 
to  said  American  Cotton  Oil  Comi)any,  for  its  Com- 
mon and  Preferred  Stock  of  the  general  description 
aforesaid,  and  upon  such  considerations  as  they  nuiy 
deem  best;   and  they  are  fully  empowered  to  enter 


256  INDUSTRIAL   COMBINATIONS. 

into  any  agreement  and  make  snch  arrangements  with 
said.  Company  as  they  may  consider  desirable  to  such 
end,  and  to  determine  with  what  shares,  property  or 
Trust  Certificates  such  Preferred  Stock  shall  be 
secured  and  the  form  and  manner  thereof. 

And  they  are  fully  and  specifically  authorized  and 
empowered  to  hold,  manage,  represent  and  be  vested 
Avith  the  legal  title  to  such  shares  required  on  any 
such  sale  or  on  such  merger  and  dissolution  of  the 
Trust;  and  to  continue  therewith  to  pursue  the  pur- 
poses aforesaid,  until  such  merger  and  dissolution 
and  the  purposes  of  this  Agreement  are  completely 
accomplished,  and  said  Trust  is  wound  up  and  liqui- 
dated, or  at  their  discretion,  to  make  distribution 
thereof  as  hereinbefore  authorized. 

And  the  said  Committee  shall  possess  and  exercise 
all  the  title,  interest  and  rights,  powers  and  privileges 
of  such  stockholders  of  said  Company,  including  the 
power  and  right  to  vote  and  act  (either  in  person  or 
by  proxy)  upon  any  measure,  matter  or  subject,  in 
such  manner  as  they  may  deem  best,  either  in  writing 
or  at  any  meeting  of  stockholders  of  said  Company, 
with  or  without  previous  notice  thereof,  and  to  repre- 
sent said  stock  in  every  respect. 

And  all  the  powers  anywhere  in  this  Agreement 
contained  are  made  applicable  to  the  provisions  of  this 
Article  as  fully  as  if  set  forth  therein. 

VI.  It  is  expressly  understood  and  agreed  that  any 
of  the  provisions  of  this  Agreement  other  than  Article 
lY.,  and  that  any  detail  of  said  general  basis  of  reor- 
ganization, may  be  altered,  amended,  or  added  to  in 


APPENDIX   XI.  257 

any  respect  by  the  assent  of  the  hoklers  for  the  time 
being  of  at  least  three-fourths  in  amount  of  the  said 
Central  Trust  Certificates  of  Deposit  issued  hereunder, 
expressed  either  in  writing  or  by  a  vote  had  at  a  spe- 
cial meeting  of  such  holders  called  for  that  purpose 
by  such  Committee  in  the  manner  hereinafter  provided ; 
and  any  and  every  such  alteration,  amendment  or 
addition  shall  become,  and  be  deemed  to  be,  a  part 
of  this  Agreement,  as  fully  and  effectually  in  every 
respect  as  if  the  same  had  been  originally  so  provided 
herein. 

VII.  The  holders  of  Trust  Certificates  of  said  The 
American  Cotton  Oil  Trust  may  avail  themselves  of 
the  benefits  of  this  Agreement,  by  depositing  their 
Trust  Certificates  hereunder  on  or  before  the  twentieth 
day  of  November,  1889 ;  and  after  that  date  the  hold- 
ers of  Trust  Certificates,  who  have  not  deposited  their 
Certificates  as  aforesaid,  shall  be  precluded  from  en- 
joying the  benefits  of  this  Agreement,  unless  said 
Committee  shall  extend  the  time  within  which  the 
same  may  be  so  deposited;  and  said  Committee  is 
hereby  granted  full  power  and  authority  to  extend  tlie 
time  within  which  such  Certificates  shall  be  deposited, 
upon  such  terms  and  penalties,  and  in  such  cases  as 
they,  in  their  absolute  judgment,  may  consider  best, 
and  may  waive  penalties  in  any  case. 

Vin.  Said  Committee  shall  have  power  to  call 
meetings  of  the  holders  of  such  Central  Trust  Certifi- 
cates of  Deposit,  for  any  purpose  and  upon  at  least 
three  days'  notice  to  be  given  by  publication  of  sudi 
call  in  two  or  more  newspapers  of  general  circulation 
s 


258  INDUSTEIAL  COIVIBINATIONS. 

published  in  the  City  of  New  York ;  and  such  publi- 
cation shall  be  the  only  notice  of  such  meetings  requi- 
site hereunder,  and  shall  be  deemed  and  taken  to  be 
actual  and  sufficient  notice  thereof  to  the  holders  of 
such  Central  Trust  Certificates  and  the  respective 
depositors  hereunder. 

IX.  No  member  of  said  Committee,  party  of  the 
first  part,  nor  said  Depositary,  party  of  the  third  part, 
shall  be  responsible  or  liable  for  any  act  or  default  of 
the  other  of  them,  or  of  any  agent  employed  by  them 
or  either  of  them;  and  they  shall  respectively  be  en- 
titled to  proper  and  reasonable  compensation  for  all 
services  by  them  respectively  rendered  in  the  execu- 
tion of  the  powers  and  duties  herein  provided  for,  and 
to  reimbursement  for  any  expenses  they  may  deem  it 
proper  to  incur  in  the  execution  of  said  trusts,  powers 
and  duties ;  and  they  or  either  of  them  may  become 
pecuniarily  interested  in  any  of  the  properties  or 
matters  which  are  the  subject  of  this  Agreement. 

X.  And  the  said  Committee,  party  of  the  first  part, 
and  said  Depositary,  party  of  the  third  part,  do  hereby 
respectively  accept  and  agree  to  the  trusts,  powers  and 
duties  upon  them  respectively  conferred  or  imposed 
hereunder,  and  will  carry  out  the  same  to  the  best  of 
their  respective  abilities;  but  it  is  expressly  under- 
stood that  they  assume  no  legal  responsibility  for  the 
execution  of  any  such  plan  of  reorganization. 

XI.  This  Agreement  may  be  printed  and  copies 
thereof  may  be  signed ;  and  all  of  said  copies  so 
signed  shall  be  deemed  and  taken  as  constituting  one 
original  contract. 


APPENDIX   XT. 


259 


XII.  This  Agreement  shall  hind  and  extend  to  the 
parties  hereto,  the  depositors  hereunder,  and  their  and 
each  of  their  successors,  executors,  administrators  and 
assigns. 

In  witness  whereof,  the  said  parties  have  here- 
unto set  their  names  or  affixed  their  corporate  seals, 
and  have  written  opposite  to  their  respective  names  or 
seals  the  amount  of  Certificates  of  the  American  Cotton 
Oil  Trust  held  by  them. 

F.  P.   OLCOTT, 
SAMUEL   THOMAS, 
EDWARD   D.   ADAMS, 
JAMES   A.   BENEDICT, 
WM.   L.   BULL, 
NICHOLAS   SHELDON, 
Signed,    sealed    and    deliv-  ] 
ered  in  the  presence  of — J 
Wm.  Nelson  Cromwell. 


Reorganization 
Committee. 


CENTRAL  TRUST   COMPANY  1 
OF   NEW   YORK, 
CORPORATE  1       By  E.   F.    HYDE, 

2d  Vice-Pres.,     \ 


I  Depositary. 


2G0  INDUSTRIAL   COMBINATIONS. 


APPENDIX   XII. 

CHARTER    OF    THE    DISTILLING    AND 
CATTLE  FEEDING  COMPANY. 

STATE   OF   ILLINOIS. 

DEPARTMENT    OF    STATE. 

Isaac  N.  Pearson,  Secretary  of  State. 

To  all  to  whom  these  jyreseats  shall  come,  greeting  : 

Whereas  a  statement  (Inly  signed  and  acknowledged 
has  been  filed  in  the  office  of  the  secretary  of  State, 
on  the  31st  day  of  January,  a.d.  1890,  for  the  organ- 
ization of  the  Distilling  and  Cattle  Feeding  Company, 
under  and  in  accordance  with  the  provision  of  "  an 
act  concerning  corporations,"  approved  April  18,  1872, 
and  in  force  July  1,  1872,  and  all  acts  amendatory 
thereof,  a  copy  of  which  statement  is  hereto  attached. 

And  whereas  a  license  has  been  issued  to  Joseph  ?>. 
Greenhut,  Adolpli  Woolner,  and  George  J.  Gibson  as 
commissioners  to  open  books  for  subscription  to  the 
capital  stock  of  the  said  company ; 

And  whereas  the  said  commissioners  have  on  the 
11th  day  of  February,  a.d.  1890,  filed  in  the  office  of 
the  secretary  of  State  a  report  of  their  proceedings 


APPENDIX   XII.  261 

under  said  license,  a  copy  of  which  report  is  hereto 
attached : 

Xow,  therefore,  I,  Isaac  N.  Pearson,  secretary  of 
State  of  the  State  of  Illinois,  by  virtue  of  the  powers 
vested  in  me  by  law,  do  hereby  certify  that  the  said 
Distilling  and  Cattle  Feeding  Company  is  a  legally 
organized  corporation  under  the  laws  of  this  State. 

In  testimony  whereof  I  hereto  set  ni}^  hand  and 
cause  to  be  fixed  the  great  seal  of  State.  Done  at  the 
city  of  Springtield  this  eleventh  day  of  February,  in 
the  year  of  our  Lord  one  thousand  eight  hundred  and 
ninety,  and  of  the  independence  of  the  United  States 
the  one  hundred  and  fourteenth. 

[SEAL.]  I.  N.  PEARSON, 

Secretary  of  State. 


State  of  Illinois,  Peoria  County,  ss.  : 
To  Isaac  N.  Vkak^ox,  Secretary  of  State: 

We,  the  undersigned,  Josepli  1>.  (ireciiliut,  Adolph 
W'oolner,  and  George  J.  Gibson,  propose  to  form  a 
corporation  under  an  act  of  the  general  assembly  of 
the  State  of  Illinois,  entitled  "  An  act  concerning 
corporations,"  approved  A})ril  IS,  1872,  and  all  acts 
auH'ndat(uy  thereof ;  and  for  the  })uri)ose  of  sueli 
organization  we  hereby  state  as  follows,  to  wit: 

1.  The  name  of  such  corporation  is  Distilling  and 
Cattle  Feeding  Company. 

2.  The  object  for  which  it  is  formed  is  to  cany  on 
a  general  business  of  distilling,  redistilling,  and  rt'i-ti- 
fying  high  wines,  alcohol,  spirits,  gins,  and  whiskies 


262  INDUSTRIAL   COMBINATIONS. 

of  every  kind  and  description,  and  deal  in  the  same, 
in  the  State  of  Illinois  and  elsewhere,  and  owning  the 
property  necessary  for  that  purpose ;  also  to  engage 
in  feeding  and  dealing  in  cattle  and  other  live  stock ; 
also  malting,  dealing  in  malt,  and  doing  any  other 
business  incident  to  the  main  purpose  of  this  corpo- 
ration. 

3.  The  capital  stock  shall  be  $35,000,000.00. 

4.  The  amount  of  each  share  is  one  hundred  dollars. 

5.  The  number  of  shares  three  hundred  and  fifty 
thousand. 

6.  The  location  of  the  principal  office  is  in  Peoria, 
in  the  county  of  Peoria,  State  of  Illinois. 

7.  The  duration  of  this  corporation  shall  be  ninetj'- 
nine  years. 

JOSEPH   B.   GREENHUT. 
ADOLPH    WOOLNER. 
GEORGE   J.  GIBSON. 


To  Isaac  N.  Pearson, 

Secretary  of  the  State  of  Illinois. 

The  commissioners  duly  authorized  to  open  books 
of  subscription  to  the  capital  stock  of  Distilling  and 
Cattle  Feeding  Company  pursuant  to  license  hereto- 
fore issued,  bearing  date  the  31st  day  of  January, 
A.D.  1890,  do  hereby  report  that  they  opened  books 
of  subscription  to  the  capital  stock  of  said  company, 
and  that  the  said  stock  was  fully  subscribed ;  that  the 
following  is  a  true  copy  of  such  subscription,  viz. :  We, 
the  undersigned,  hereby  severally  subscribe   for  the 


APPENDIX   XII. 


263 


mimber  of  shares  set  opposite  our  respective  names,  to 
the  capital  stock  of  Distilling  and  Cattle  Feeding 
Company  and  we  severally  agree  to  pay  the  said  com- 
pany, for  each  share,  the  sum  of  one  hundred  dollars 
as  the  same  shall  be  called  for. 


Names. 


Shares. 


Amount. 


Joseph  B.  Greenhut 
Warren  H.  Corning 
Wm.  N.  Ilobart  . 
Lewis  H.  Greene  . 
H.  L.  Terrell  .  . 
Adolph  Woolner  . 
Peter  J.  Hennessy 
Nelson  Morris  .  . 
H.  M.  Kinsman    . 


43,750 
43,750 
43,750 
43,750 
43,750 
43,750 
43,650 
43,350 
500 


54,375,000 
4,375,000 
4,375,000 
4,375,000 
4,375,000 
4,375,000 
4,305,000 
4,335,000 
50,000 


That  on  the  eleventh  day  of  February,  a.d.  1890, 
at  207  North  Jefferson  ave.,  Peoria,  111.,  at  the  hour 
of  10  a.m.,  they  convened  a  meeting  of  subscribers 
afor-esaid,  pursiumt  to  notice  required  by  law,  wliich 
said  notice  was  deposited  in  the  postothce  properly 
addressed  to  each  subscriber,  ten  days  before  the  time 
fixed  therein,  a  co\)j  of  wliich  said  notice  is  as  follows, 
to  wit: 

You  are  hereby  notified  that  the  capital  stock  of 
Distilling  and  Cattle  Feeding  Company  has  been  fully 
subscribed,  and  that  a  meeting  of  the  subscribers  of 
such  stock  will  be  held  at  207  North  Jefferson  ave., 
Peoria,  111.,  on  the  11th  day  of  February,  a.d.  1890, 


264  INDUSTRIAL  COMBINATIONS. 

at  10  o'clock,  a.m.,  for  the  purpose  of  electing  a  board 
of  directors  for  said  company,  and  for  the  transaction 
of  snch  other  business  as  may  be  deemed  necessary. 
(Signed.) 

JOSEPH   B.  GREENHUT, 
ADOLPH   WOOLNER, 
GEORGE  J.  GIBSON, 

Commissioners. 

That  said  subscribers  met  at  the  time  and  place  in 
said  notice  specified  and  proceeded  to  elect  directors, 
and  that  the  following  persons  were  duly  elected  for 
the  term  of  one  year,  viz. :  Joseph  B.  Greenhut,  War- 
ren H.  Corning,  Wm.  N.  Hobart,  Lewis  H.  Greene, 
H.  L.  Terrell,  Adolph  Woolner,  Peter  J.  Hennessy, 
Nelson  Morris,  H.  M.  Kingman. 

JOSEPH  B.  GREENHTJT, 
A.  WOOLNER, 
GEORGE  J.  GIBSON, 

Commissio)iers. 


State  of  Illinois,  County  of  Peoria,  ss.  : 

On  this  11th  day  of  February,  a.d.  1890,  person- 
ally appeared  before  me,  a  notary  public  in  and  for 
said  county  in  said  State,  Joseph  B.  Greenhut,  Adolph 
Woolner,  and  George  J.  Gibson  and  made  oath  that 
the  foregoing  oath  by  them  subscribed  is  true  in  sub- 
stance and  in  fact. 

[SEAL.]  N.  E.  D.  HIGGINS, 

Notary  Public. 


APPENDIX  xir.  265 

Statk  of  Illinois,  Peoria  County,  ss. : 

I,  Francis  G.  Minor,  clerk  of  the  circuit  court  in  and 
for  the  county  of  Peoria  and  State  of  Illinois,  and  e.r- 
officio  recorder  of  deeds  in  said  county,  do  hereby 
certify  that  the  annexed  instrument  was  filed  for 
record  in  my  office  on  the  12th  day  of  Feb'y,  a.d. 
1890,  at  9 :  19  o'clock  a.m.,  and  has  been  duly  recorded 
ill  book  3  on  page  64  in  said  recorder's  office. 

In  witness  whereof  I  have  hereunto  set  my  hand,  at 
my  office  in  Peoria,  the  day  and  year  above  written. 

E.  G.  MINOR, 
Clerk  and  Recorder, 
By  J.  P.  DURKIN, 

Deputy. 


266  INDUSTRIAL  COMBINATIONS. 


APPENDIX   XIII. 

BY-LAWS    OF    THE    UNITED    STATES    LEATHER 
COMPANY. 

AS   ADOPTED   MAY   16tH,   1893. 

ARTICLE   I. 

MEETINGS    OF   STOCKHOLDERS. 

§  1.  The  annual  meeting  of  the  Stockhoklers  shall 
be  held  at  the  principal  office  of  the  Company,  in  the 
State  of  New  Jersey,  on  the  fourth  Wednesday  in 
February,  at  the  hour  of  twelve  o'clock  noon  of  said 
day  in  each  year,  for  the  purpose  of  electing  twenty- 
seven  directors  to  serve  for  the  ensuing  year,  and  for 
the  transaction  of  such  other  business  as  may  come 
before  such  meeting. 

At  least  twenty  days'  notice  of  the  time  and  place 
of  such  meeting  shall  be  given  by  the  Secretary  to 
each  Stockholder  by  mail  to  such  address  as  may  be 
on  record  in  his  office.  But  no  failure  to  give  such 
notice  shall  be  held  or  taken  to  invalidate  the  proceed- 
ings at  such  meeting,  when  the  same  shall  be  held  at 
the  time  and  place  hereby  fixed  and  established,  and 
such  meeting  may  be  adjourned  from  day  to  day,  until 
its  business  is  completed. 


APPENDIX   XIII.  267 

If  for  any  reason  there  should  be  a  faihire  to  hold 
such  meeting,  or  to  elect  a  Board  of  Directors  thereat, 
a  meeting  may  be  held  at  said  place  at  any  time  there- 
after for  the  said  purpose,  on  the  call  of  the  Board  of 
Directors,  or  by  the  holders  of  a  majority  of  the  stock 
on  twenty  days'  notice  thereof,  to  be  given  to  each 
Stockholder  by  personal  service  or  by  mail.  Any  of 
the  books  and  papers  of  the  Company  which  shall  be 
required  by  the  holders  of  a  majority  of  the  stock, 
present,  shall  be  exhibited  at  such  meetings. 

§  2.  Special  meetings  of  the  Stockholders  may  be 
called  at  any  time  for  any  lawfid  purpose,  on  the 
order  of  a  majority  of  the  Board  of  Directors,  and 
shall  be  called  by  the  President  on  the  request,  in 
writing,  of  the  holders  of  a  majority  of  the  stock 
issued,  stating  the  object  for  which  the  meeting  is  to 
be  called,  and  the  business  transacted  at  any  special 
meeting  shall  be  given  to  each  Stockholder  by  personal 
service  or  by  mail  at  least  twenty  days  before  the  day 
fixed  for  such  meeting. 

§  3.  At  all  meetings  of  Stockholders  the  vote  shall 
be  by  ballot,  unless  the  same  is  waived,  and  each 
Stockholder  shall  be  entitled  to  one  vote,  to  be  cast 
in  person  or  by  proxy,  for  every  share  of  stock  stand- 
ing in  his  name  on  the  books  of  the  (Company,  and  a 
majority  of  the  votes  cast  shall  determine  the  question 
or  questions  sul)mitted  to  vote. 

§  4.  At  their  meeting  next  proceeding  any  meeting 
of  Stockholders,  the  Board  of  Directors  may  appoint 
from  the  Stockholders  tliree  Inspectors,  whose  duty 
it  shall  be  to  receive  and  count  the  votes  east  by  the 


268  INDUSTRIAL   COMBINATIONS. 

Stockholders  at  such  meeting,  to  report  the  result 
thereof  in  writing  to  such  meeting,  and  to  deliver  the 
ballots  cast  upon  each  question  to  the  clerk  of  the 
meeting  with  their  report.  But  it  shall  be  competent 
for  the  holders  of  a  majority  of  the  stock  represented 
at  any  meeting  to  appoint  Inspectors  to  act  at  such 
meeting. 

§  5.  Should  the  holders  of  the  requisite  amount  of 
stock  be  unrepresented  at  any  meeting  where  the  vote 
of  any  definite  proportion  of  the  stock  is  required,  it 
shall  be  competent  for  the  Stockholders  present  or 
represented  to  adjourn  the  meeting  from  time  to  time 
until  the  requisite  amount  of  stock  shall  be  repre- 
sented. 

§  6.  At  all  meetings  of  the  Stockholders  the  holders 
of  a  majority  of  the  outstanding  stock  of  the  Company 
or  their  representatives  shall  constitute  a  quorum,  but 
a  less  number  may  adjourn  from  time  to  time  until  a 
c^uorum  shall  be  convened.  The  majority  of  the  stock 
represented  by  those  present  may  elect  a  Chairman 
and  Clerk,  but  the  President  of  the  Company,  if  pres- 
ent, shall  act  as  Chairman,  unless  the  meeting  shall, 
by  a  majority  vote,  elect  a  Chairman. 

The  Secretary  shall,  if  present,  act  as  Clerk  of  the 
meeting,  imless  the  meeting  shall,  by  a  majority  vote, 
elect  its  own  Clerk.  In  either  case,  it  shall  be  the  duty 
of  the  Clerk  to  keep  a  true  and  faithful  record  of  the 
proceedings  of  the  meeting,  and  to  certify  the  same 
under  his  hand  to  the  Board  of  Directors  at  their  next 
meeting. 


APPENDIX  xin.  2G9 

ARTICLE   II. 

BOARD    OF    DIRECTORS. 

§  1.  The  management  of  the  affairs  of  the  Company, 
and  the  control  of  its  business  shall  be  vested  in  a 
board  of  twenty -seven  Directors,  each  of  whom  shall, 
at  the  time  of  his  election  and  during  his  continuance 
in  office,  be  a  bona  tide  holder  of  stock  standing  in  his 
name  on  the  books  of  the  Company. 

§  2.  Fourteen  members  of  the  Board  shall  consti- 
tute a  quorum,  who,  whenever  and  wherever  convened 
in  conformity  to  the  provisions  of  the  By-Laws,  shall 
have  full  power  to  transact  business.  But  a  less  num- 
ber may  adjourn  from  time  to  time  until  a  quorum 
shall  be  convened. 

§  3.  At  the  first  meeting  of  the  Board  of  Directors 
after  their  election,  or  at  any  subsequent  meeting 
when  the  same  shall  not  have  been  done  at  the  first 
meeting,  they  shall  choose  by  ballot  from  their  niim- 
ber  a  President  and  a  First  and  a  Second  and  a  Third 
Vice-President  who  shall  respectively  hold  their  offices 
\iiitil  their  successors  shall  be  duly  chosen.  They  shall 
also  elect  a  Secretary,  Assistant  Secretary,  Treasurer, 
Assistant  Treasurer,  Auditor,  an  Executive  Committee, 
and  such  additional  officers  and  agents  as  they  nuiy 
deem  advisaljle,  whose  duties  shall  be  defined  by  the 
liy-Laws,  and  who  shall  res})ectively  hold  their  offices 
during  the  ])leasure  of  the  Board.  One  person  may 
hold  more  than  one  office. 

§  4.  it  sliall  l)e  the  duty  of  the  Board  of  Directors 
to  present,  at  each  annual  meeting  of  the  Stockholders, 


270  INDUSTRIAL   COMBINATIONS. 

a  full  and  clear  statement  of  the  business  and  affairs 
of  the  Company. 

§  5.  The  Board  of  Directors  shall  fix  or  approve  the 
compensation  of  the  officers  of  the  Company,  and  of 
the  several  heads  of  departments.  The  wages  of  sub- 
ordinates and  other  agents  and  employees  shall  be 
fixed  by  the  Executive  Committee,  subject  at  all  times 
to  the  action  of  the  Board. 

§  6.  Vacancies  in  the  Board  of  Directors  shall  be 
filled  by  the  Board  from  time  to  time,  and  in  case  of 
any  failure  to  elect  a  Board  of  Directors  at  the  time 
or  in  the  manner  herein  provided,  the  existing  Board, 
for  the  time  being,  shall  continue  in  office  until  their 
successors  shall  be  elected. 

§  7.  The  Board  of  Directors  shall  hold  regular 
meetings  at  the  office  of  the  Company  in  the  City  of 
Kew  York,  State  of  New  York,  on  the  fourth  Tuesday 
of  the  months  of  March,  June,  September  and  Decem- 
ber, for  the  transaction  of  such  business  as  may  come 
before  them. 

Special  meetings  of  the  Board  may  be  called  at  any 
time  or  place  by  the  President,  and  shall  be  called 
by  him  or  one  of  the  Vice-Presidents  on  the  written 
request  of  nine  members  of  the  Board,  stating  the 
object  of  such  meeting.  Notice  of  not  less  than  four 
days  from  date  of  notice,  by  mail,  or  two  days  b}^  tele- 
graph, of  all  special  meetings  shall  be  given  to  each 
Director,  in  which  the  object  of  the  meeting  shall  be 
stated,  and  no  business  shall  be  transacted  except  such 
as  shall  have  been  so  stated  in  the  notice. 

§  8.   At  all  meetings  of  the  Board,  the  President,  or 


APPENDIX   XIII.  271 

in  his  absence  a  Vice-President,  present,  shall  act  as 
Chairman,  and  in  their  disability  to  act,  one  of  the 
Directors  present  may  be  chosen  to  preside.  The 
presiding  officer  shall  preserve  order  and  regulate  all 
discussions  in  accordance  with  parliamentary  usage. 

§  9.  At  all  meetings  of  the  Board,  the  order  of  busi- 
ness shall  be : 

1st.    Reading  of  the  minutes  of  the  previous  meeting. 

2d.   Reports  of  Officers  and  Committees. 

3d.   Unfinished  business. 

4th.   New  business. 

§  10.  Any  officer,  agent  or  employee  may  be  at  any 
time  removed  at  the  pleasure  of  the  Board,  except  the 
President,  who  may  be  removed  by  a  vote  of  eighteen 
of  the  members  of  the  Board. 

§  11.  During  a  prolonged  absence  or  disability  of 
any  officer  the  Board  may  appoint  a  substitute  pro  tem- 
pore, and  on  the  death  or  resignation  of  any  officer  the 
Board  shall  till  the  vacancy. 

ARTICLE  III. 

THE    EXECUTIVE    COMMITTEE. 

§  1.  There  shall  be  an  Executive  Committee  of  nine, 
consisting  of  the  President  and  the  three  Vice-Presi- 
dents for  the  time  being,  and  of  five  other  members  to 
be  chosen  by  the  Directors  from  their  own  number. 
The  President,  or  in  his  absence  one  of  the  Vice-Presi- 
dents shall  preside  at  the  meetings  of  tlie  Committee. 
The  remaining  members  of  the  Committee  shall  Iiave 
power  to  fill  vacancies  in  its  member.'iliip,  subject  to 


272  INDUSTRIAL   COMBINATIONS. 

the  approval  of  the  Board  of  Directors  at  its  next 
meeting. 

There  shall  be  regular  meetings  of  the  Committee  at 
least  once  a  week  at  a  time  and  place  to  be  fixed  by 
the  Committee,  and  the  Committee  may  make  such 
rules  as  it  thinks  best  with  reference  to  special  meet- 
ings and  the  notice  thereof,  but  the  President  may  call 
a  special  meeting  at  any  time  and  the  President  or 
any  of  the  Vice-Presidents  shall  do  so  at  the  request 
of  four  members  of  the  Committee. 

Pive  of  the  members  of  the  Committee  shall  consti- 
tute a  quorum  for  the  transaction  of  business,  and  a 
majority  vote  of  all  the  members  present  at  a  regular 
meeting  of  the  Committee,  or  at  any  meeting  of  which 
due  notice  has  been  given  to  all  the  members,  shall  be 
decisive,  and  the  unanimous  vote  of  seven  members 
shall  be  valid  and  decisive  at  any  meeting,  even  though 
no  notice  thereof  was  given  to  the  members  not 
present. 

The  Executive  Committee  shall  possess  and  exercise 
all  the  powers  of  the  Board  of  Directors  during  the 
intervals  between  the  meetings  of  the  Board,  subject 
to  the  orders  and  resolutions  of  the  Board.  Reports 
of  the  proceedings  shall  be  submitted  to  the  Board  at 
their  next  meeting. 

§  2.  Subject  to  the  orders  and  resolutions  of  the 
Board,  the  Executive  Committee  shall  have  charge 
and  control  of  all  the  affairs  and  business  of  the  Com- 
pany, and  of  all  its  books,  papers  and  property,  and 
also  of  the  corporate  seal.  They  may  appoint  custo- 
dians of  the  same,  and  remove  them  or  any  of  them 
at  pleasure. 


APPENDIX  xiir.  273 

They  may  appoint  Committees  to  aid  in  the  conduct 
of  the  affairs  and  business  of  the  Company,  and  the 
majority  in  each  such  Committee  shall  be  members  of 
the  Board  of  Directors ;  but  the  other  members  of  each 
such  Committee  may  be  Stockholders  or  employees. 

They  may  appoint  a  temporary  or  acting  officer  to 
discharge,  under  their  direction,  the  duties  of  any 
officer  wlio  by  reason  of  any  disability  cannot  act, 
except  those  of  the  President,  whether  there  be  a 
vacancy  in  such  office  or  not,  and  the  acts  of  sucli  tem- 
porary ofiicer  shall  be  as  valid  and  effectual  as  those 
of  the  officer  whose  duties  he  shall  perform. 

ARTICLE   IV. 

PRESIDENT. 

§  1.  The  President  shall  be  the  chief  executive  offi- 
cer of  the  Company,  and  shall  exercise  general  su})er- 
vision  over  all  its  affairs,  officers  and  employees  subject 
to  the  direction  of  the  l^oard  of  Directors  and  of  the 
Executive  Committee.  He  shall  have  i)ower  to  call 
special  meetings  of  the  Board  of  Directors  and  of  the 
Executive  Committee  to  be  held  at  such  times  and 
places  as  shall  be  designated  by  him.  and  it  shall  be 
his  duty  to  call  meetings  of  the  Board  immediately  on 
the  written  request  of  nine  members  thereof  stating 
therein  the  object  of  such  meeting.  He  shall  also  call 
s])ecial  meetings  of  the  Board  upon  the  written  retjuest 
of  four  of  the  members  of  the  Executive  Committee. 
The  said  call  for  said  special  meeting  shall  l)e  issued 
by  him  forthwith,  and  shall  conform  with  said  request 


274  INDUSTRIAL   COMBINATIONS. 

as  to  time,  place  and  object  of  sucli  meeting.  He  shall 
preside  at  all  meetings  of  the  Board  and  of  the  Exec- 
utive Committee  when  present  thereat.  He  shall  be 
careful  that  all  the  business  and  affairs  of  the  Com- 
pany are  conducted  in  conformity  to  law,  and  that  the 
By-Laws  and  rules  and  resolutions  of  the  Board  are 
faithfully  executed. 

§  2.  He  shall  have  power,  with  the  concurrence  of 
the  Board  of  Directors  or  of  the  Executive  Committee, 
to  negotiate,  execute  and  deliver  all  contracts,  and 
shall  sign  all  agreements,  contracts  and  other  docu- 
ments, except  where  the  signing,  execution  or  delivery 
of  such  contract  or  document  is  otherwise  provided  for, 
and  shall  generally  exercise  and  perform  the  powers 
and  duties  such  as  are  usually  exercised  by  and  de- 
volved upon  the  President  of  an  incorporated  company, 
except  as  herein  otherwise  provided.  In  case  a  vacancy 
occurs  in  the  office  of  President  the  same  shall  be  filled 
by  the  Board  of  Directors  without  delay. 

§  3.  The  President  shall  prepare  an  annual  report 
of  the  affairs  and  business  of  the  Company,  and  sub- 
mit the  same  to  the  Board  of  Directors  at  their  meet- 
ing next  before  the  annual  meeting  of  Stockholders. 

AKTICLE  V. 

VICE-PRESIDENTS. 

§  1.  In  case  the  office  of  President  shall  become 
vacant  by  death,  resignation  or  otherwise,  or  in  case  of 
the  absence  of  the  President  or  other  disability  to  dis- 
charge the  duties  of  his  office,  the  same  shall  in  all 


APPENDIX   XIII.  275 

things  for  the  time  being  devolve  upon  the  Vice- 
Presidents  in  their  respective  order,  who  shall  exercise 
all  the  powers  and  duties  of  the  President,  and  the 
three  Vice-Presidents  shall  respectively  do  and  per- 
form such  other  acts  as  the  Board  of  Directors  or 
Executive  Committee  may  from  time  to  time  authorize 
them  to  do. 

ARTICLE   VI. 

SECRETARY    AND    ASSISTANT    SECRETARY. 

§  1.  It  shall  be  the  duty  of  the  Secretary  to  attend 
all  the  meetings  of  the  Board  of  Directors,  and  keep  a 
true  and  faithful  record  of  all  tlieir  proceedings,  and 
enter  the  same  in  a  book  to  be  provided  and  kept  for 
that  purpose.  He  shall  give  due  notice,  as  hereinbe- 
fore provided,  of  all  the  meetings  of  the  Directors  and 
Stockholders. 

§  2.  He  shall,  subject  to  the  control  and  direction 
of  the  Executive  Committee,  have  the  custody  of  the 
corporate  seal,  and  shall  affix  the  same  to  all  docu- 
ments which  shall  require  sealing,  and  which  shall 
have  been  duly  authorized  or  ap})roved  by  the  Board 
of  Directors  or  the  Executive  Committee,  and  shall 
perform  such  other  duties  from  time  to  time  as  shall 
be  presented  to  or  required  of  him  by  the  Board  of 
Directors,  Executive  Committee  or  the  President. 

§  3.  The  Assistant  Secretary  shall  perform  sucli 
duties  from  time  to  time  as  shall  be  presented  to  or 
required  of  liim  by  the  Board  of  J^irectors,  Executive 
Committee  or  the  President. 


276  INDUSTRIAL   COMBINATIONS. 

ARTICLE   VII. 

TREASURER    AND    ASSISTANT    TREASURER. 

§  1.  It  shall  be  the  duty  of  the  Treasurer  to  keep 
and  account  for  all  moneys,  funds  and  property  of  the 
Company  which  shall  come  into  his  hands,  and  he  shall 
render  such  accounts  and  present  such  statements  to 
the  Directors,  the  President  and  Executive  Committee 
as  may  be  required  of  him.  He  shall  deposit  all  funds 
of  the  Company  which  may  come  into  his  hands  in 
such  bank  or  banks  as  the  Board  of  Directors  or  Exec- 
utive Committee  may  designate ;  he  shall  keep  his 
bank  accounts  in  the  name  of  the  Company,  and  shall 
exhibit  his  books  and  accounts  to  the  President,  the 
Vice-Presidents  or  any  Director  upon  application  at 
the  office  during  ordinary  business  hoiu's ;  he  shall  pay 
out  money  as  the  business  may  require  upon  the  order 
of  the  properly  constituted  officer  or  officers  of  the 
Company,  taking  proper  vouchers  therefor :  Provided, 
however,  that  the  Board  of  Directors  or  the  Executive 
Committee  shall  have  uower  by  resolution  to  delegate 
any  of  the  duties  of  the  Treasurer  to  other  officers,  and 
to  provide  by  what  officers  all  bills,  notes,  checks, 
vouchers,  orders  or  other  instruments  shall  be  signed. 

§  2.  The  Assistant  Treasurer  shall  perform  such 
duties  from  time  to  time  as  shall  be  presented  to  or 
required  of  him  by  the  Board  of  Directors  or  the 
Executive  Committee. 

§  3.  All  officers  and  employees  designated  by  the 
Board  of  Directors  shall  give  security  to  the  Company 
for  the  faithful  performance  of  their  duties,  in  such 


APPENDIX   XIII.  277 

form  and  in  such  an  amount  as  shall  be  prescribed,  by 
the  Board. 

ARTICLE   VIII. 

AUDITOR. 

§  1.  The  Auditor  shall  have  supervision  of  the 
books  of  account  of  the  Company,  and  of  all  books 
and  papers  relating  thereto,  subject  to  the  Executive 
Committee,  and  shall  examine  all  voiichers  and  audit 
all  accounts.  He  shall  keep  such  records  of  the  busi- 
ness of  the  Company  as  will  at  all  times  show  the 
condition  of  the  accounts. 

§  2.  He  shall  render  statements  to  the  l*resideut 
and  to  the  Executive  Committee  as  may  be  required, 
showing  all  receipts  and  disbursements,  and  the  amount 
of  money  due  to  the  Company  from  all  sources  or 
otherwise  remaining  to  the  credit  of  the  Coini)any,  and 
he  shall  nuike  such  other  reports  and  statements  as 
may  be  required  of  him  from  time  to  time. 

ARTICLE   IX. 

TRANSFER    AGENT. 

§  1.  There  shall  be  a  transfer  agency  established  and 
maintained  in  the  City  of  New  York,  under  the  direc- 
tion and  control  of  the  Executive  Committee  for  the 
registration  ol'  transfers  of  stocks  and  bonds,  and 
keeping  accounts  of  the  same. 

§  2.  Transfers  of  stock  shall  only  be  made  on  the 
books  ol'  the  Company,  cither  in  person  or  by  attorney, 
but  no  ecrtiticate  shall  be  issued  to  an  assignee,  unless 


278  INDUSTRIAL  COMBINATIONS. 

the  certificate  representing  the  stock  assigned  shall  l)e 
surrendered  and  cancelled,  except  when  the  Board  of 
Directors  or  Executive  Committee,  being  satisfied  of 
the  loss  or  destruction  of  any  certificate,  shall  authorize 
the  issue  of  a  duplicate  thereof. 

ARTICLE  X. 

CORPORATE    SEAL. 

§  1.  A  Corporate  Seal  shall  be  prepared  and  shall 
be  kept  by  the  Secretary  in  the  office  of  the  Company. 
The  impression  of  the  seal  may  be  made  and  attested 
by  either  the  Secretary  or  an  Assistant  Secretary,  or 
by  any  other  person  duly  authorized  by  the  Board 
of  Directors  or  by  the  Executive  Committee,  for  the 
authentication  of  contracts  and  other  papers  requiring 
the  seal  and  bearing  the  signature  of  the  President  or 
a  Vice-President. 

ARTICLE  XL 

AMENDMENTS. 

§  1.  Any  of  these  By-Laws  may  be  amended,  altered, 
added  to,  repealed  or  annulled  by  the  concurrent  vote 
of  a  majority  of  all  the  outstanding  stock  present  at 
any  meeting  of  Stockholders,  where  notice  of  the  pro- 
posed alteration  or  amendment  shall  have  been  given 
in  the  call  for  such  meeting ;  and  at  any  time  these 
By-Laws  may  be  amended,  altered,  added  to,  repealed 
or  annulled  by  the  unanimous  vote  of  all  the  members 
of  the  Board  of  Directors  present  at  any  meeting  when 
the  amendment;  alteration  or  addition  shall  have  been 


APPENDIX   XIIT.  279 

proposed  to  the  Board  and  entered  upon  its  minutes  at 
a  meeting  at  least  thirty  days  previous  to  the  meeting 
at  whicli  the  same  shall  be  adopted,  of  which  minutes 
at  least  four  days'  notice  shall  have  been  given  to  each 
Director  by  mail. 

§  2.  Every  person  who  becomes  a  Stockholder  in 
this  Company  shall  be  deemed  to  assent  to  these 
By-Laws,  and  shall  designate  to  the  Secretary  the 
address  to  which  he  desires  that  the  notices  herein 
required  to  be  given  may  be  sent,  and  all  notices  mailed 
to  such  addresses,  with  postage  prepaid,  shall  be  con- 
sidered as  duly  given  at  the  date  of  mailing,  and  any 
person  failing  to  so  designate  his  address  shall  be 
deemed  to  have  waived  notice  of  such  meeting. 


280  INDUSTRIAL   COMBINATIONS. 


APPENDIX   XIV. 

CORDAGE    REORGANIZATION. 

1.   REPORT   OF   REORGA:^TIZATION    COMMIT- 
TEE AND  PLAN   OF  REORGANIZATION. 

New  York,  June  15,  1893. 
To   the    Creditors  and   Stockholders   of  the   National 
Cordage  Company : 

The  undersigned  have  been  requested  to  act  as  a 
Reorganization  Committee  to  investigate  the  affairs  of 
the  National  Cordage  Company,  and  to  devise  a  plan 
for  its  reorganization.     They  report  as  follows  : 

Their  examination  into  the  affairs  of  the  Company 
leads  the  Committee  to  believe  that  the  chief  impedi- 
ment to  the  financial  success  of  this  Company  has  been 
that  of  lack  of  adequate  working  capital.  This  did 
not  present  itself  as  a  practical  difficulty  to  the  stock- 
holders or  directors  so  long  as  the  commercial  and 
financial  markets  remained  in  a  normal  condition, 
except  that  it  has  obviously  increased  the  Company's 
expenses,  and,  to  a  certain  extent,  diverted  the  atten- 
tion of  the  officers  and  directors  from  the  management 
of  the  manufacturing  business  of  the  Company. 

The  great  prosperity  of  the  business,  also,  and  the 
e.vperiments  attending  its  formative  period,  have  in- 


APPENDIX   XIV.  281 

duced  a  scale  of  expenditure,  both  in  purchases  and  in 
management,  which  may  be  avoided  in  tlie  future. 

But  special  conditions  of  the  money  market,  well 
understood  by  all  parties  in  interest,  confronted  this 
Company  about  May  1st,  1893.  At  this  time  of  the 
year  stocks  of  merchandise  in  this  business  are  always 
largest ;  the  distributing  season  for  binder  twine  had 
just  arrived;  'large  amounts  of  money  Avere  required 
to  ship  this  twine  and  to  sell  it  on  time  payments ;  the 
Company  was  more  extended  than  at  any  other  period 
of  the  whole  yeai",  and  the  most  active  season  for  all 
the  other  products  of  the  Company  was  setting  in.  At 
this  time,  therefore,  when  the  Company  most  needed 
large  amounts  of  capital,  the  condition  of  the  money 
market  made  it  impossible  for  the  Board  of  Directors 
of  the  National  Cordage  Company  to  find  sufficient 
capital  for  the  renewal  of  maturing  obligations. 

Under  these  prevailing  conditions,  the  sale  of  addi- 
tional preferred  stock,  as  approved  by  the  Hoard  of 
Directors  in  a  resolution  dated  April  29th,  189.'3,  was 
also  found  to  be  impracticable.  The  emergency  thus 
created  called  for  prompt  and  radical  action.  There- 
fore, on  Miiy  4th,  18*,).'>,  it  was  decided  by  tlie  Directors 
and  various  creditors  and  stockholders  of  the  Company 
that  the  C^ompany  must  be  put  in  the  hands  of  the 
receivers,  to  protect  alike  the  interests  of  creditors  and 
stockholders. 

The  Chancellor  of  New  Jersey  appointed  Edward 
F.  C.  Young  and  G.  "Weaver  Loper  as  receivers  of  tlu' 
Company.  After  tlie  receivers  had  qualified,  tlicv 
addressed  the  following  communication  to  the  prin- 


282  INDUSTRIAL  COMBINATIONS. 

cipal   creditors   and  some  large    stockholders  of  the 
Company : 

"  Dear  Sirs : 

"  The  undersigned,  receivers  of  the  National  Cordage 
Company,  find  it  highly  desirable,  in  their  efforts  to 
protect  the  property  for  the  benefit  of  all  concerned, 
that  some  committee  representing  the  creditors  and 
the  parties  interested  shonld  be  appointed  to  confer 
with  them  as  to  questions  of  policy,  and  to  further 
some  steps  for  the  ultimate  reorganization  of  the 
affairs  of  the  Company. 

"  We   therefore   address    you,   understanding    that 
you  have  some  interest  directly  or  for  others  in  these 
matters,    and   express   our   strong   desire    that    steps 
should  be  taken  in  the  direction  indicated. 
"  Yours  truly, 

"  (Signed)  E.  F.  C.  YOUNG, 

"G.  WEAVER  LOPER, 
"  Receivers." 

In  response  to  this  letter,  a  meeting,  called  together 
by  the  receivers,  was  held  on  the  8th  day  of  May,  at 
which  there  was  unanimously  appointed  as  a  Reorgan- 
ization Committee  Mr.  George  C.  Magoun,  of  Baring, 
Magoun  &  Co. ;  Mr.  Ernst  Thalmann,  of  Ladenburg, 
Thalmann  &  Co.,  and  Mr.  Gustav  H.  dossier,  of  G. 
Amsinck  &  Co.  At  this  meeting  also,  the  presidents 
of  three  of  the  largest  Xew  York  Banks  consented  to 
act  as  an  advisory  committee,  in  conjunction  with  the 
Reorganization  Committee. 

The  firm  of  Messrs.  Deloitte,  Dever,  Griffiths  &  Co., 


APPENDIX    XIV.  283 

chartered  accountants,  of  London,  England,  and  New 
York,  was  em})loyed  to  make  a  thorough  investigation 
of  the  books  of  the  Coni})any.  At  the  same  time  an 
investigation  was  begun,  and  is  now  in  progress,  con- 
corning  the  physical  condition  and  value  of  the  various 
properties  and  the  legal  status  of  the  Company.  This 
latter  investigation  is  not  yet  concluded,  but  the  im- 
portance of  keeping  the  business  going  by  a  prompt 
reorganization  is  so  great  as  to  induce  the  Committee 
not  to  await  the  completion  of  this  investigation 
before  recommending  action  by  stockholders  and  cred- 
itors. 

PRESENT   CONDITION   OF   THE   COMPANY. 

The  increase  of  the  production  of  the  various  mills 
is  shown  by  the  books  of  the  Company  to  be  as  follows: 

Pounds  of  Rope  and  Binder  Twine  Made. 

Year  ending  October  31,  1890,      ....  43,411,725  pounds. 

Year  ending  October  31,  1891,      ....  74,704,835  pounds. 

Year  ending  October  31,  1892,      ....  130,315,156  pounds. 

Six  months,  ending  April  30,  1893,    .     .     .  80,757,197  pounds. 

Assets  and  Liahilities. 

Messrs.  Deloitte,  Dever,  Griffiths  &  Co.  have  just 
finished  their  preliminary  examination,  and  the  Com- 
mittee refer  to  their  report  on  the  annexed  sheet. 

As  to  the  present  financial  condition  of  the  Comi)any, 
tlicir  i(']iort  sliows  that  the  book  value  of '  all  assets 
(after  writing  off  the  amounts  recommended  by  the  Com- 
mittee) amounts  to  $2r),7o2.r)17.S<)  and  that  the  liabil- 
ities (exclusive  of  capital  stock),  amount  to  ;?  11,U.S(),- 


284  INDUSTRIAL   COMBINATIONS. 

417.71.  Among  these  assets  are  included  twenty  mills 
and  plants,  all  going  concerns,  of  wliicli  eight  are  held 
under  lease  from  the  security  corporation.  The  trans- 
action of  increasing  the  common  stock  from  $  10,000,- 
000  to  $  20,000,000,  as  shown  by  the  records  of  the 
Company,  has  not  yet  been  carried  into  the  books  of 
account.  When  this  shall  have  been  done,  an  increase 
in  the  book  value  of  assets  Avill  be  shown. 

Whatever  may  be  the  result  of  the  appraisement 
now  in  progress,  the  Committee  is  of  the  opinion  that 
such  result  will  show  the  value  of  these  assets,  as 
assets  of  a  going  concern,  to  be  very  considerably  in 
excess  of  the  amount  of  the  liabilities. 

If,  however,  on  account  of  the  refusal  of  the  stock- 
holders to  assent  to  the  present  plan  of  reorganization, 
or  for  other  reasons,  it  should  become  necessary  to 
liquidate  the  affairs  of  the  Company  at  once,  the  Com- 
mittee is  unable,  at  the  present  stage  of  their  investi- 
gation, to  express  an  approximate  opinion  as  to  the 
result. 

The  books  and  accountants'  statement  show  that 
the  dividends  were  declared  and  paid  to  the  stock- 
holders as  follows : 

For  the  year  ended  Nov.  1st,  1891, $1,300,000 

For  the  year  ended  Nov.  1st,  1892, 1,450,000 

For  the  six  months  ended  May  1st,  1893,  ....  800,000 

The  Committee  have  not  thought  it  advisable  to 
attempt  to  state  a  profit  and  loss  account  for  the  past 
six  months,  because  this  would  involve  a  stoppage  of 
the  business  of  the  various  mills  for  the  purpose  of 


APPENDIX  XIV.  285 

taking  an  inventory,  and  because  a  detailed  examina- 
tion of  the  books  of  the  various  concerns  would  involve 
a  further  delay  of  several  weeks  in  the  proposed  reor- 
ganization, and  because  the  present,  and  perhaps 
temporary,  low  price  of  raw  materials  would  probably 
not  fairly  represent  at  the  moment  the  real  condition 
of  the  Company. 

As  a  matter  of  abundant  precaution,  however,  the 
Committee  has  recommended  a  reduction  of  the  book 
estimate  of  the  value  of  merchandise  assets  and  other 
items,  to  the  extent  of  $  1,501,000,  which  represents  a 
reduction  in  value  accruing  since  the  end  of  the  last 
fiscal  year,  and  especially  since  the  appointment  of 
receivers.  They  made  this  reduction  before  reaching 
the  figures  which  they  have  hereinbefore  stated  as 
approximately  representing  the  condition  of  the  Com- 
pany. 

The  Committee  find,  on  examination  of  the  accounts, 
that  prior  to  October,  1891,  sundry  operations  in  mer- 
chandise, of  a  more  or  less  speculative  character,  and 
not  likely  to  occur  again,  were  made,  which  resulted 
in  loss  to  the  Company.  It  is  due,  however,  to  state 
that  some  of  the  Directors  who  advocated  such  trans- 
actions, voluntarily  made  good  the  loss  so  sustained 
at  about  the  time  it  occurred,  so  that  the  Company 
itself  has  not  been  the  loser  thereby. 

The  Committee  do  not  find  that  any  funds  of  the 
Company  have  been  employed  in  any  stock  or  other 
speculations  other  than  those  above  mentioned. 

As  the  result  of  their  preliminary  investigation,  the 
Committee  feel  justified  in  expressing  the  following 


286  INDUSTRIAL   COMBINATIONS. 

ESTIMATE   OF   THE   FUTURE    OF   THE   BUSINESS. 

They  are  of  the  opinion  that  the  business  of  the 
Cordage  Company,  under  prudent  and  conservative 
management,  and  with  the  additional  working  capital 
recommended  by  them,  can  be  made  to  produce  very 
satisfactory  results,  sufficient  for  the  payment  of  inter- 
est on  the  bonds  proposed  to  be  issued  and  for  the  pay- 
ment of  dividends  upon  the  proposed  preferred  stock, 
and  for  the  payment,  in  good  years,  of  satisfactory 
dividends  upon  the  common  stock. 

In  this  connection,  they  call  attention  to  the  fact 
that  the  payments  for  interest  for  the  year  ending  Octo- 
ber 31st,  1892,  alone,  amounted  to  ,$430,102.56,  and 
for  the  six  months  ending  May  1st,  1893,  f  269,250.43. 

The  anticipated  saving  upon  this  item  of  interest 
alone  would  pay  the  interest  on  the  proposed  bonds 
and  a  portion  of  the  dividends  on  the  preferred  stock. 
It  is  just  to  add  that  the  principal  officers  and  direc- 
tors of  the  Company,  being  largely  interested  in  it, 
have  never  received  any  salaries. 

The  Committee  therefore  submit  the  following 

SUGGESTIONS. 

With  a  view  to  certain  proposed  changes  in  the 
business  management  of  the  Company,  the  number 
of  the  Board  of  Directors  should  be  increased,  and 
a  majority  of  the  present  directors  should  resign,  to 
make  room  for  new  members  of  the  Board,  to  be 
approved  by  the  Reorganization  Committee  and  by  the 
United  States  Trust  Company  of  New  York. 

This  having  been  done,  radical  changes  and  reduc- 


APPENDIX  XIV.  287 

tion  of  expenses  in  many  departments  can  be  advan- 
tageously effected,  new  business  metliods,  especially 
in  the  financial  department,  introduced,  unnecessary 
offices  abolished,  concentration  of  management  secured, 
and  provision  made  for  the  protection  and  promotion 
of  the  business  interests  of  the  Company  in  all  direc- 
tions, whether  this  business  be  continued  by  the 
present  organization,  or  by  a  new  organization  to  be 
formed. 

The  Committee  especially  recommends  that  the 
financial  part  of  the  business  should  be  put  under 
the  management  of  a '  finance  committee  in  charge 
of  this  department  of  the  business  at  the  Home 
Office,  as  well  as  at  brand i  offices. 

In  order  to  continue  the  business  of  the  Company, 
money  must  be  provided, 

(1 )  To  pay  its  existing  debts ; 

(2)  To  supply  it  with  adequate  working  capital. 
The  simplest  method  for  providing  these  necessary 

funds  is  by  the  voluntary  action  of  the  stockholders 
and  creditors  of  the  Company.  If  the  stockholders 
and  creditors  decline  to  co-operate  in  procuring  these 
funds,  the  Company  can  continue  its  business  only  by 
incurring  a  very  considerable  additional  debt,  which 
would  make  its  stocks  of  doubtful  value,  or  by  a 
judicial  sale  of  its  i)roperties  to  or  for  the  benefit 
of  a  new  c()mi)any,  freed  from  some  of  the  present 
obligations,  or  by  proceedings  to  assess  stockholders. 

If  the  reorganization  which  the  Committee  suggests 
be  carried  out,  the  following,  generally  speaking,  will 
be 


2»»  INDUSTRIAL   COMBINATIONS. 

THE   PURPOSES   OF   THE   PLAN. 

(1)  To  fund  and  extend  a  portion  of  the  present 
debt  by  means  of  bonds  to  be  issued ; 

(2)  To  supply  an  adequate  working  capital,  mainly 
by  the  voluntary  contributions  of  stockholders ; 

(3)  To  deliver  to  stockholders  as  a  consideration  for 
these  contributions  preferred  stock  of  the  Company 
at  par ; 

(4)  To  acquire  such  additional  properties  as  the 
stockholders  and  the  Reorganization  Committee  may 
hereafter  deem  to  be  desirable  in  the  interests  of  the 
Company. 

To  carry  out  these  purposes,  the  Committee  pro- 
poses the  following 

PLAN. 

1.  The  National  Cordage  Company  (or  some  suc- 
cessor corporation)  will  issue  collateral  trust  hrst 
mortgage  bonds  having  thirty  years  to  run,  secured 
by  a  mortgage  on  all  the  mortgageable  property  of 
the  National  Cordage  Company  (or  its  successor  cor- 
poration), including  its  lease  from  the  Security  Cor- 
poration, to  an  amount  not  exceeding  Six  Million 
Dollars,  bearing  six  per  cent,  interest,  -with  a  sinking 
fund  of  three  per  cent,  per  annum  after  1895.  One 
Million  Dollars  par  value,  or  so  much  as  may  be  nec- 
essary, of  these  bonds  will  be  retained  by  the  trustee, 
subject  to  the  order  of  the  Board  of  Directors  evi- 
denced by  a  vote  of  at  least  two-thirds  in  number  of 
the  Board,  for  the  purpose,  among  other  things,  of 
paying  off  existing  prior  liens  on  the  Union  Mills. 


APPENDIX    XIV.  289 

Five  Million  Dollars  par  value  of  these  bonds,  or  so 
much  thereof  as  may  be  deemed  necessary  by  the  Com- 
mittee, will  be  sold  and  the  proceeds  used,  among 
other  things,  in  paying  off  the  existing  debts  of  the 
Company,  or  will  be  delivered  to  present  creditors 
of  the  Company  in  satisfaction  of  those  debts,  in  full 
or  in  part.  The  bonds  will  be  so  sold  or  paid  at  the 
price  or  rate  of  85%. 

As  many  as  possible  of  these  Five  Million  Dollars 
par  value  of  bonds  will  be  underwritten  by  a  guaranty 
syndicate  at  85%,  for  a  commission  of  5%. 

Before  being  offered  for  sale  elsewhere,  or  to  the 
creditors  in  payment  of  debts,  the  whole  of  these 
bonds  will  be  offered  to  the  stockholders  for  subscrip- 
tion at  85%. 

The  stockholders  of  the  Company,  both  preferred 
and  common,  will  have  the  right,  until  and  including 
July  11th,  1893,  to  subscribe  for  these  bonds  at  this 
price.  If  the  issue  should  be  oversul)scribed  by  the 
stockholders,  allotments  will  be  nuule  })ro  rata  in  the 
proportion  which  their  respective  holdings  of  stock 
bear  to  the  total  capital  stock,  both  preferred  and 
common,  of  the  Company. 

2.  For  the  purpose  of  delivery  to  contributing 
stockholders,  the  i)ref erred  stock  of  the  National 
Cordage  Company  now  amounting  to  If! 5,()00,()00.  will 
l)e  increased  to  $8,000,000.  This  increased  issue 
will  liav(!  the  same  privileges  as  the  present  i)referred 
stock. 

Each  preferred  stockholcU'r  will  pay  to  the  Keor- 
ganization  Committee,  or  its  nominee,  at  such  times 

D 


290  INDUSTRIAL  COMBINATIONS. 

and  in  such  amounts  as  the  Reorganization  Commit- 
tee shall  designate,  a  sum  of  money  equal  to  twenty 
per  centum  of  the  par  value  of  their  holdings  of 
preferred  stock,  and  will  receive  in  exchange  for 
such  payments  preferred  stock  of  the  Company  at 
par. 

Each  common  stockholder  will  pay  to  the  Reorgani- 
zation Committee,  or  its  nominee,  at  such  times  and  in 
such  amounts  as  the  Reorganization  Committee  shall 
designate,  a  sum  of  money  equal  to  ten  per  centum  of 
their  holdings  of  common  stock  of  the  Company,  and 
will  receive  in  exchange  for  such  payments  preferred 
stock  of  the  Company  at  par.  If  any  of  the  holders 
of  common  stock  prefer  not  to  pay  this  sum  in  cash, 
they  can  make  their  contribution  by  assigning  to  and 
delivering  to  the  Reorganization  Committee,  or  its 
nominee,  to  be  used  for  the  purposes  of  the  reorgani- 
zation, certificates  for  fifty  per  centum  par  value  of 
their  respective  holdings  of  common  stock,  but,  in  this 
event,  they  will  receive  no  preferred  stock  for  their 
contribution. 

If,  under  this  plan,  it  becomes  necessary  to  provide 
for  fractious  of  shares,  either  in  the  distribution  of 
new  preferred  stock,  or  the  payment  of  contributions 
in  common  stock,  then  the  Reorganization  Commit- 
tee will  make  such  adjustments,  through  the  Trust 
Company,  by  the  delivery  of  script  receipts  redeemable 
in  stock,  when  such  receipts  shall  be  presented  and 
surrendered  in  lots  of  $  100  or  any  multiple  thereof  in 
par  value. 

3.    If  the  stockholders  do  not  unanimously  consent 


APPENDIX  XIV.  291 

to  the  foregoing  plan,  or  do  not  consent  with  sufficient 
unanimity  to  satisfy  the  Reorganization  Committee, 
then  the  Reorganization  Committee  will  take  such 
measures,  either  by  increasing  the  debt  of  the  pres- 
ent Company,  or  by  winding  up  the  affairs  of  the 
present  Company,  selling  out  its  assets,  and  organiz- 
ing another  company  for  the  purchase  of  these  assets 
and  the  continuance  of  the  business  of  the  National 
Cordage  Company,  or  otherwise,  as  they  think  advis- 
able. The  stockholders  who  assent  to  such  plan 
and  become  parties  to  such  reorganization  agreement, 
however,  will  occupy  substantially  the  same  relative 
position  and  will  have  a  corresponding  interest  in 
the  reorganized  Company  or  in  the  new  Company,  as 
is  herein  proposed;  hut  the  stockholders  of  the  National 
Cordage  Company,  whether  preferred  or  common,  who 
do  not  assent  to  such  plan  and  become  parties  to  such 
reorganization  agreement  will  not  he  represented  in  and 
tvill  not  hare  any  right  or  interest  in  such  reorganized  or 
new  company. 

The  Committee  cannot  too  strongly  urge  all  interested 
parties,  ])oth  creditors  and  stockholders,  to  co-operate 
in  this  })lan  of  I'coi'ganization.  The  ]ii()])('rli('s  iiiusl 
be  kept  together,  and  tlie  I'ights  of  creditors  and  stock- 
holders preserved  and  protected  by  keeping  the  assets 
intact  and  carrying  on  tlic  l)usiness.  It  is  ecpially 
clear  that  tlie  shareliolders,  botli  preferred  and  com- 
mon, must  agree  to  make  such  ])roper  contribution  for 
working  cajjital  as  the  circumstances  of  the  Com])any 
demand.  A  i)rompt  accci)tance  of  this  plan  by  all 
parties  will  avoid  troublesome  litigation  between  credit- 


292  INDUSTRIAL   COMBINATIONS. 

ors  and  stockholders  and  will  very  materially  increase 
the  future  value  of  their  property. 

GEORGE   C.    MAGOUN,  , 

Beorr/anization 
ERNST   THALMANX,       ; 

Committee. 
GUSTAV  H.  GOSSLER,  j 


2.   REPORT   OF   ACCOUNTANTS. 

To  Messrs.  GEORGE   C.   MAGOUN,!  „  .     ,. 

ERNST   THALMANN,      [^'^onjamzation 

GUSTAV  H.  GOSSLER,  J       ^'^~«««- 

Gentlemen : 

We  have  had  submitted  to  us  the  Treasurer's  Books 
and  Vouchers  of  the  National  Cordage  Company,  and 
from  an  examination  of  them  and  with  the  information 
afforded  us  by  the  Officials  of  the  Company  we  find 
that,  exclusive  of  the  Book  values  of  the  Real  Estate, 
Plant,  and  Good-will,  etc.,  the  Assets  on  the  even- 
ing of  the  4th  May,  1893,  amounted  to  .$10,403,- 
657.13,  the  details  of  which  appear  on  the  attached 
Statement  of  Assets,  and  their  value  is  subject  to  our 
Notes  thereon. 

We  iind  the  value  of  the  Real  Estate,  Plant,  and 
Good-wHll,  etc.,  as  recorded  in  the  Books  of  Account, 
to  be  ^  14,931,300.76  and  the  amount  paid  on  account 
of  the  purchase  of  the  Security  Mills  to  be  ^  337,500.00, 
but  we  cannot  form  any  opinion  as  to  the  true  value  of 
these  Assets. 

The  Security  J\Iills  were  leased  to  the  Company, 


APPENDIX    XIV.  293 

Novenil)er  1st,  1891,  from  the  Security  Corporation, 
under  a  lease  providing  for  a  rental  of  $  3G0,000  per 
year,  and  a  sinking  fund  of  $  22o,00()  per  year  to  apply 
iilMHi  the  purchase  price  of  the  property,  as  represent- 
ing which  purchase  price  f  0,000,000  in  bonds  were 
issued  by  the  Security  Corporation  and  secured  by  a 
mortgage  to  the  Manhattan  Trust  Company.  By  the 
payment  of  $  337,500,  three  hundred  and  fifty -three 
bonds  have  been  purchased  and  cancelled. 

The  Liabilities,  as  they  appear  on  the  Books  and 
Records  of  the  Company  under  date  of  4th  May,  1893, 
amount  to  f  11,986,417.71,  and  we  have  obtained  a 
Certificate  from  the  Treasurer  that  all  known  Claims 
are  included  in  that  amount. 

I'^rom  the  following  Statements,  and  subject  to  our 
^N'otes  and  Bemarks  contained  thereon,  the  Liabilities 
are  in  excess  of  the  Assets  by  $  l,o22,7()0.58 ;  this 
result,  however,  is  before  taking  into  consideration  the 
value  of  the  Real  Estate,  Plant,  ^Machinery,  Good-will, 
etc.,  etc.,  and  the  Security  jVIills,  which,  according  to 
the  original  entiles  in  the  l^ooks  of  Account,  together 
aggregate  the  sum  of  $  15,208,8(50.70. 
We  are.  Gentlemen, 

Your  obedient  servants, 
DELOITTE,  DEVER,  GRIFFITHS  &  CO., 
Chartered  Atrou n ta n ts. 
4  LoTiiHi  in  ,  London,  E.  C. 

ANU 

G9  Wall  Street,  New  York  City. 
lOtli  June,  1893. 


294 


INDUSTRIAL   COMBINATIONS. 

ASSETS. 


Particulars. 

Assets  Pledged. 

Total  Assets. 

Cash  and  Bank  Balances,  at  Central 

Office,   and    at    Agencies,   as    ac- 

knowledged by  the  Bankers  and 

Agents. 

S  47,965.43 

Cash  deposited  with  the  Old  Colony 

Trust  Company,  viz.,  S  10,000.00, 

as  acknowledged  by  them,  and  a 

cash  loan  of  §  1.5,000.00. 

25,000.00 

Note.  —  The  Loan  of  $  1.5,000  is  un- 

secured. 

Open  Accounts,  including  an  amount 

of  S  413,812.29  due  from  the  Chi- 

cago and  Pittsburgh  Agencies,  as 

per  the  Agents'  latest  statements 

and  advices. 

$  143,000.00 

822,200.30 

Note.  —  The    Open   Accounts, 

amounting    to    S  408,358.01,   have 

every  appearance  of  being  recov- 

erable   in  full,    and  we  are  as- 

sured that  such  is  the  case. 

Unearned  Premiums  of  Insurance  on 

Hemp    Cargoes,    as   per    Policies, 

and  balance  of  Insurance  due  for 

Salvage,  since  paid. 

43,601.64 

Value  of  Claims  for  Allowances  on 

the    purchase   of    Hemp,   Freight 

Overcharges,      Customs,      Draw- 

backs,   and    Railroad    Shortages, 

etc.,  as  estimated  by  the  Treasurer 

of  the  Company. 

21,500.41 

Notes  Receivable :  — 

Given  by  Sub-Com- 

panies                         $  879,562.31 

497,475.47 

Other  Notes                      143,276.24 

16,500.00 

$  1,022,838.55 

1,022,838.55 

Forward, 

S  656,975.47 

S  1,983,106.33 

APPENDIX  XIV. 


295 


ASSETS.     (Continued.) 


Particulars. 


Note.  —  0)i  the  'Mst 
May,  18!)3,  the  Notes 
in  the  po)<se£sion  of 
the  (Jompany  arid 
s  XL  b  III  it  ted  to  us 
(imounted  to 

The  Notes  out  for  Col- 
lection, as  recorded 
in  the  JJooks,  amount- 
ed to 

The  Notes  due  and 
paid  to  the  Receiv- 
ers and  7'ecorded  in 
the  Recj'irers'  Books 
amounted  to 

And  the  Notes  Pledged 
to  B a nk er s,  fo r 
which  we  have  their 
acknowled  (J  me  nt, 
amounted  to 


Forward, 


$  400,430.41 


27,576.68 


20,855.99 


513,975.47 


!1, 022,838. .")5 


The  Ordinarij  Trade  Notes,  ainount- 
imj  to  S  143,27(i.24,  appear  to  be 
good  and  recoverable,  and  none  of 
them  are  overdue. 

BalaiUM'  diK'  from  Note  Brokers  for 
the  sale  of  Notes  jjiveii  by  tlie 
Sub-Coiiipaiiies,  as  per  statements 
rendoreil  l)y  them. 

NoTK.  —  Of  the  balance  due  from 
Note  Brokers,  viz.  .■  $  138,.')<»().00, 
the  collection  of  $  i:U,<i79.49  is 
dependent  upon  the  solveiici/  of  the 
Eastern  Milts,  irhich  vent  into  lite 
hands  if  Receivers  on.  the  Hth 
Maij,  1893.  It  is,  hov)cver,  fair  to 
state  in  irgard  to  this  that  the 
Eastern  .Mills  would  be  .vdvent  if 
this  Ciiini'iini/  disclmrr/eil  its  in- 
ili-litt'dniss  to  llii'iii,  the  amount  of 
icliich  is  included  in  the  !Stat<'inent 
of  Liabilities. 

FouwAun, 


Assets  Pledged. 


$  650,975.47 


S(i56,975.47 


Total  Assets. 


$i  1,983,10(1.33 


138,590.00 


.?  2,121 ,702.33 


296  INDUSTRIAL   COMBINATIONS. 

ASSETS.     (Continued.) 


Particulars. 


Forward, 

Stock  of  Manilla,  Sisal  and  New 
Zealand  Hemp  and  Rope,  and 
Stock  of  Binder  Twine,  the  Mar- 
ket Value  of  4th  May,  18!)3,  heing 
certified  to  hy  the  President  and 
the  Treasurer  of  the  Company. 

Note.  —  The  Inventory  prices  are 
subject  to  3fai-ket  fluctuations 
from  day  to  day,  but  the  Presi- 
dent and  Treasurer  of  the  Com- 
pany state  that  this  same  Stock  of 
Merchandise  at  10th  June,  1893, 
would  not  represent  a  sum  less 
than  ©  7,189,407.42. 

Stock  of  Merchandise  at  Pittsburgh 
and  London  Agencies,  as  per  the 
Agents'  Statements. 

Payments  on  account  of  Manilla 
Hemp  Shipments,  as  per  Invoices 
and  Bills  of  Lading,  and  Insurance 
on  Cargoes,  as  per  Marine  Insur- 
ance Policies. 

Investments  (at  Cost) :  — 
Security  Bonds  ^  366,025.00 

Hoover  &  Allison  Twine 
Company  60,000.00 


$  426,02.5.00 


Note.  —  These  Investments  have 
been  taken  at  Cost,  and  the  Treas- 
urer of  the  Company  has  certified 
that  they  are  7iot  overvalued  at 
.'t?42(i,025.00. 

Indebtedness  of  Mills  controlled  by 
the  Company. 

Note. —  The  value  of  this  Debt  is 
subject  to  the  Assets  of  each  Mill 
being  in  excess  of  its  Liabilities, 
and  there  is  no  complete  evidence 
in  this  respect,  as  ice  have  7iot  seen 
th?  Books  of  these  Mills. 


Assets  Pledged. 


$  656,975.47 


4,896,935.05 


344,000.00 


Total  Assets. 


$2,121,702.33 


7,189,407.42 


1,221.16 


329,917.29 


426,025.00 


395,383.93 


•S  5,897,910.52    .§  10,463,()57.13 


ArrENDIX   XIV. 


297 


LIABILITIES. 


Particulars. 


Amount  of  Col- 
lateral Security. 


Total 
Liabilities 


Hemp    Acceptances    against    Ship- 
ments and  Sterling  Acceptances. 
Collateral  Loans,  including  accrued 
Expenses  to  4tli  May,  ISit;?. 
Secured  by  Merchandise. 
"  "    Security  Bonds. 

"  "    Book  Debts. 

"         "   Notes  Receivable. 
Notes  Payable :  — 
Company's  own 

Paper  discounted        $  541 ,000.00 
Atlantic  Mutual  In- 
surance Co.  .'')(),010.()0 

1".")ii7,(ii().(;o 


Due  on  Open  Accounts, 
including  an  amount 

of    .'ii;4'2r),s,s2.:;'.t    for 

Manufacturing   Con- 
tracts   and    interest 

accrued  to  4th  May, 

1X03,  on  the  Security 

Bonds. 
Due  to  Mills  controlled 

by  the  Company:  — 
For  their  Notes  given 

to  and   sold   by  the 

Company  $  3,029,486.70 

Excess  of   Credit  Bal- 
ances on  the  several 

Mill  .\ccounts  in  the 

Company's        Hooks 

over     the     Balances 

due  by  the   Mills  to 

the  Company  .')a'),887.27 


NoTK.  —  The  Liabilities  of  this  Com- 
punij  to  the  several  Mills  voukl 
be  increased  if  the  ofl'-set  of  lial- 
ances  due  bi/  the  Mills  to  the  Com- 
painj  proved  to  he  irrecovendde  on 
arroilllt  of  the  AsKctso/  riirh  Mill 
beinf/  lefts  than  its  IJahiliticx,  and 
there  is  no  complete  evidence  in 
this  respect,  as  v)e  have  not  seen 
the  Books  of  these  Mills. 


$4,896,935.05 
344,000.00 
143,000.00 
513,975.47 


!  1,209,723.81 
5,59(),705.(;() 


597,010.(10 


957,603.67 


3,625,.373.97 


85,897,910.52 


$11,98(1,417.71 


298  INDUSTRIAL   COMBINATIONS. 

SUMMARY. 

Assets  (page  296) ,  $  10,403,657.13 

Book  Value  of  Real  Estate,  Plant,  Machin- 
ery, Good-will,  etc.,  etc.,  and  Payments 
ON  Account  of  Security  Mills,  15,268,860.76 

Total  Assets,  subject  to  the  foregoing  remarks,      $25,732,.J17.89 
Total  Liabilities  (page  297),  11,986,417.71 

$  13,746,100.18 


3.   ABSOKPTION   OF  THE  SECURITY  CORPO- 
RATION. 

Whereas,  the  properties  of  the  said  Security  Cor- 
poration are  at  present  under  lease  to  the  National 
Cordage  Company,  as  specified  in  an  indenture  of  lease 
made  the  second  day  of  November,  1891,  between  the 
Security  Corporation,  the  National  Cordage  Company, 
and  the  Manhattan  Trust  Company ;  and 

Whereas,  since  the  making  of  said  lease,  the  National 
Cordage  Company  has  become  insolvent,  and  on  the 
fourth  day  of  May,  1893,  Receivers  thereof  were 
appointed  by  the  Chancellor  of  New  Jersey ;  and 

Whereas,  the  creditors  and  stockholders  of  said 
National  Cordage  Company  thereafter  appointed 
Messrs.  George  C.  Magoun,  Ernst  Thalmann,  and 
Gustav  H.  Gossler,  a  Reorganization  Committee  to 
devise  and  carry  out  a  plan  for  the  reorganization  of 
the  affairs  of  said  National  Cordage  Company ;  and 

Whereas,  it  is  proposed,  that  as  a  part  of  said 
reorganization,  the  business  heretofore  conducted  by 


APPENDIX   XIV.  299 

said  National  Cordage  Company  shall  in  the  fixture  be 
C(jnducted  by  a  reorganized  or  successor  corporation ; 
and 

Whereas,  said  Reorganization  Committee,  while  fully 
cognizant  of  the  value  of  the  properties  of  the  Security 
Corporation,  have  expressed  their  unwillingness  to 
recommend  to  such  reorganized  or  successor  corporation 
the  assumption  of  said  existing  lease  or  the  nuiking  of 
a  new  lease  upon  the  same  terms,  stating  that  they 
consider  the  yearly  payments,  and  particularly  the 
sinking  fund  payments,  under  the  present  lease,  too 
burdensome  and  creating  too  large  a  fixed  charge  upon 
such  reorganized  or  successor  corporation ; 

But,  Whereas,  said  Reorganization  Committee  have 
expressed  their  willingness  to  recommend  to  such 
reorganized  or  successor  corporation,  the  creation  and 
issue  of  its  six  per  cent,  guaranteed  stock  to  an  amount 
not  exceeding  six  million  dollars,  to  be  redeemable  at 
any  time  at  the  o])ti()n  of  the  company,  at  lO;"),  on 
wliicli  guaranteed  stock  a  fixed  yearly  dividend  of  six 
per  centum  per  ammm,  jjayable  quarterly,  shall  be 
paid  by  said  coi'i)oratioii,  out  of  the  jirofits  of  the 
business  of  said  coi'jioi-atioii,  Ix'l'ore  any  divith'uds 
shall  be  set  apart  or  paid  ujjou  any  otlicr  stock  of  said 
company,  but  which  guaranteed  stock  shall  be  entitled 
to  no  other  or  further  dividend  ;  the  holders  of  such 
guaranteed  stock  to  have  priority  in  case  of  liquidation 
over  tlie  holders  of  the  preferred  stock  of  said  cor- 
poration f  such  guaranteed  stock  to  be  issued  for  the 
])urchase  of  said  bonds  or  of  somte  part  thereof,  or  of 
said  h-ased  property  or  of  some  part  thereof,  or  of 


300  INDUSTRIAL  COMBINATIONS. 

other  property,  so  as  ultimately  to  be  exchanged  for 
said  security  bonds,  at  par,  said  bonds,  after  such 
exchange,  to  be  cancelled  if  all  of  said  bonds  shall  be 
so  exchanged,  or  if  not  all,  or  substantially  all  so  ex- 
changed, to  be  held,  sold,  transferred,  or  otherwise 
disposed  of,  subject  to  the  order  of  said  Eeorganizar 
tion  Committee,  and  as  it  shall  deem  to  be  for  the 
best  interests  of  said  reorganized  or  successor  corpora- 
tion, for  the  purpose,  among  other  things,  of  ultimately 
acquiring  title  to  said  mortgaged  property,  all  obliga- 
tions of  said  Committee  to  said  depositors  being  in  all 
respects  fulfilled  by  the  delivery  of  said  shares  to  said 
depositors. 

Now,  Therefore,  we,  the  undersigned,  oAvners  or 
holders,  or  both,  of  the  first  mortgage  consolidated 
gold  bonds  of  the  Security  Corporation  to  the  amounts 
set  opposite  our  respective  signatures  hereto,  which 
bonds  are  secured  to  be  paid  by  an  indenture  of  mort- 
gage dated  the  second  day  of  jSTovember,  1891,  between 
said  Security  Corporation  and  the  Manhattan  Trust 
Company  of  the  City  of  New  York,  hereby  severally 
consent  and  agree  with  the  other  signers  hereof,  and 
with  said  Reorganization  Committee,  and  with  the 
National  Cordage  Company,  and  ^\\t\\  said  reorganized 
or  successor  corporation,  each  in  consideration  of  the 
consent  and  agreement  of  the  other  signers  hereof, 
and  of  one  dollar  to  each  of  us  in  hand  paid  by  the 
others  of  said  signers,  and  of  other  valuable  consid- 
erations : 

I.  That  all  of  the'  bonds  so  held  or  owned  by  us  and 
each  of  us  shall,  upon  the  demand  of  said  Eeorganiza- 


APPENDIX    XIV.  301 

tion  Committee,  be  deposited  with  the  Manhattan  Trnst 
Comi)any,  in  trust,  in  exchange  for  suitable  receipts 
entitling  the  holder  thereof  to  receive  an  amount  of 
said  guaranteed  shares  at  par,  when  said  shares  shall 
have  been  received  by  said  Trust  Company,  equal  to 
the  par  vahie  of  the  Itonds  so  deposited,  and  said  bonds 
are  hereby  transferred  to  the  said  Eeorganization 
Committee,  in  trust,  for  the  purposes  herein  expressed, 
and  we,  the  signers  hereof,  hereby  severally  make, 
constitute,  and  appoint  said  Committee,  or  any  two  of 
them,  or  their  successors,  our  and  each  of  our  true  and 
lawful  attorneys,  for  us  and  each  of  us,  and  in  our 
respective  names,  places,  and  stead,  and  until  the  first 
day  of  January,  1894,  to  exercise  all  the  powers  and 
CDiitrul  conferred  upon  bondholders  by  said  mortgage 
and  by  said  lease,  or  by  either,  either  in  requesting, 
notifying,  or  directing  the  trustee  of  said  mortgaged 
pro})erty,  or  otherwise,  in  all  respects  with  like  effect 
as  if  we  were  personally  acting. 

II.  Upon  the  receipt  of  said  shares  of  guaranteed 
stock  by  said  Manhattan  Trust  C()mi)any  to  be  so 
exclianged,  said  Keorganization  Committee  is  hereby 
authorized  and  empowered  as  the  agents  and  attorneys- 
in-fact  of  the  signers  hereof  and  uf  each  of  them,  to 
assent  to  and  arrange  for  the  cancellation,  modifica- 
tion, or  any  other  disposition  of  said  lease  from  said  Se- 
cuiity  Corjioration  to  said  National  Cordage  Coni])any, 
and  ol'  the  said  mortgage  so  nuide  to  secure  said  bonds; 
to  cause  the  said  bonds  so  deposited  to  be  cauc(dled, 
and  tlic  mortgage  securing  the  same  to  be  satisiied  of 
record;   lo  agree  with   said   Security  Corporation  for 


302  INDUSTRIAL   COMBESTATIONS. 

the  conveyance  and  transfer  by  it,  free  from  the  lien  of 
said  mortgage,  of  all  or  any  part  of  the  property  covered 
thereby,  including  the  good-will,  to  said  ISTational 
Cordage  Company,  or  to  said  reorganized  or  successor 
corporation,  in  consideration  of  the  cancellation  of  said 
bonds,  the  issue  of  said  stock,  or  for  such  other  con- 
sideration as  said  Committee  may  think  proper ;  or,  in 
case  the  whole  of  said  issue  of  bonds  shall  not  be 
deposited,  to  hold,  sell,  or  otherwise  dispose  of,  so 
many  of  said  bonds  as  shall  be  so  deposited,  and  to 
make  such  arrangements  concerning  the  cancellation, 
modification,  or  other  disposition  of  said  lease  and  said 
mortgage,  or  either  of  them,  as  they  may  deem  best. 
And  said  Reorganization  Committee  is  hereby  further 
authorized  and  empowered  to  take  such  steps,  enter 
into  such  contracts,  and  do  such  things  as  may  in  their 
judgment  be  necessary  or  pi'oper  for  carrying  out  the 
arrangement  proposed  by  them  and  hereinbefore  recited, 
whether  by  taking  the  action  hereinbefore  specified,  or 
otherwise,  as  they  may  deem  proper;  provided,  how- 
ever, that  before  taking  any  steps  which  shall  deprive 
the  signers  hereof  of  their  ownership  of  said  bonds,  or 
which  shall  alter  or  cancel  the  lien  of  the  mortgage 
securing  the  same,  the  Manhattan  Trust  Company 
shall  have  received  said  shares  of  guaranteed  stock  for 
delivery  in  exchange  for  said  bonds  as  hereinbefore 
recited,  and  said  reorganized  or  successor  corporation, 
in  said  certificates  of  stock,  or  otherwise,  by  suitable 
contract,  shall  have  agreed  that  no  mortgage  or  other 
lien  prior  or  siii:»erior  to  the  lien  of  such  guaranteed 
stock  shall  hereafter  be  created  upon  the  Mills  or  plant 


APPENDIX   XIV.  303 

of  said  reorganized  or  successor  corporation  by  it  or 
with  its  consent  (except,  first,  to  provide  for  existing 
liens  on  said  properties,  and,  second,  to  secure  the 
Bonds  proposed  to  be  issued  as  a  part  of  the  i)euding 
reorganization,  the  amount  of  wliich  bonded  issue  is 
not  yet  fully  deterndned,  but  Avhicli  is  not  to  exceed 
^  7,500,000),  without  the  consent  of  the  holders  of  80 
per  cent,  in  value  of  said  guaranteed  stock,  and  of  the 
preferred  stock  of  said  reorganized  or  successor  cor- 
poration. It  is  the  intention  of  this  instrument  to 
confer  \ipon  said  Committee  full  and  absolute  powers 
to  cancel,  modify,  or  otherwise  dispose  of  said  inden- 
ture of  mortgage  and  lease,  and  of  the  property  of 
every  sort  covered  thereby  in  such  manner  and  to  such 
extent  as  they  shall  deem  to  be  for  the  best  interests 
of  said  National  Cordage  Company,  or  of  said  reor- 
ganized or  successor  corporation,  provided,  that  said 
shares  of  stock  are  delivered  to  the  signers  hereof  as 
herein  provided.  Delivery  to  the  Manhattan  Trust 
('ompany  sidiject  to  the  order  of  the  signers  hereof, 
shall  constitute  an  effective  delivery  of  said  shares 
witliin  tlu'  meaning  hereof. 

For  all  tlie  i)ur})()ses  hertnn  C()nt('iii])l;ite(l,  tlic  action 
of  a  majority  of  the  nu'iubers  for  the  time  being  eon- 
stituting  said  Reorganization  Committee,  as  jirovided 
in  tlic  Reorganization  Agreement  of  .1  line  l'.»tli.  ISD.S, 
shall  constitute  the  action  of  the  Committee,  and  have 
the  same  legal  effect  as  the  unanimous  action  of  the 
( 'oiiiiniitcf. 

111.  This  agreement  shall  beeoine  binding  vqwn  the 
signers  hereof  as  soon  as  the  owners  or  holders  of  two 


304 


INDUSTRIAL   COAIBINATIONS. 


million  five  hundred  thousand  dollars,  par  value,  of 
said  bonds,  now  outstanding,  shall  have  signed  the 
same,  and  shall  continue  binding  upon  the  signers 
hereof,  until  and  including  the  first  day  of  January, 
1894.  If  the  arrangement  above  outlined  shall  not 
have  been  carried  out  prior  to  that  date,  or  if  this 
agreement  shall  not  have  been  signed  prior  to  iS'ovem- 
ber  1st,  1893,  by  the  owners  or  holders  of  at  least  two 
million  five  hundred  thousand  dollars,  par  value,  of 
said  bonds,  then,  and  in  either  of  said  events,  said 
bonds  shall  thereupon  be  returned  to  the  depositors, 
and  this  agreement  shall  thereupon  cease,  determine, 
and  become  null  and  void. 

In  Witness  Whereof,  we  have  hereunto  set  our  hands, 
this day  of  October,  1893. 


4.   APPRAISAL   OF   GOOD-WILL. 

New  York,  November  13th,  1893. 
We  have  been  requested  to  appraise  the  value  of  the 
business  of  the  mills  which  will  be  owned  and  con- 
trolled by  the  United  States  Cordage  Company.  In 
arriving  at  our  conclusions,  we  have  assumed  three 
things,  viz. : 


APPENDIX  XIV.  305 

1.  That  the  business  of  the  United  States  Cordage 
Company  will  be  conducted  under  one  central  compe- 
tent management. 

2.  That  its  various  mills  will  continue  to  control 
the  trade  which  they  have  controlled  in  the  past. 

3.  That  the  United  States  Cordage  Company  will 
have  sufficient  working  capital. 

The  total  number  of  spindles  in  the  mills  which 
will  be  owned  or  controlled  by  the  United  States 
Cordage  Company  will  be  6104,  or,  if  the  Elizabeth- 
port  mill  is  rebuilt,  about  7000. 

This  represents  from  66%  to  70%  of  the  ananufact- 
uring  capacity  of  all  the  cordage  mills  in  the  United 
States. 

The  consmnption  of  cordage  in  the  United  States 
has  increased  for  the  past  nine  years  at  the  rate  of 
15%  per  annum. 

We  estimate  that  this  consumption  will  continue  to 
increase  during  the  next  five  years  at  the  rate  of  at 
least  10%  per  annum. 

We  omit  from  consideration  the  value  of  the  physical 
property,  and  also  any  increased  value  to  the  good- 
will of  the  business,  resulting  from  the  consolidation 
of  the  twenty  mills  under  one  management.  We  do, 
however,  consider  the  economies  resulting  from  this 
consolidation. 

We  base  our  conclusions  on  the  above  statements,  sup- 
plemented by  the  knowledge  which  we  have  acquired 
from  many  years'  experience  in  the  cordage  business. 

We  have  reached  the  conclusion  that  the  fair,  prac- 
ticable way  to  ascertain  the  value  of  the  good-will  or 

X 


306  INDUSTRIAL  COMBINATIONS. 

earning  capacity  of  tlie  business  of  the  United  States 
Cordage  Company  upon  the  above  basis  is  to  adopt  the 
standard  commonly  accepted  in  the  trade,  and  to  use 
the  spindles  as  the  unit  of  value.  We  think  that  a 
conservative  vakiation  of  each  spindle,  for  this  pur- 
pose, is  $4000.  We  multiply  this  figure  by  6104,  or 
by  7000,  as  the  case  may  be,  the  number  of  spindles, 
which  makes  our  appraised  value  of  the  good-will  of 
the  business  of  the  United  States  Cordage  Company 
from  124,416,000  to  $28,000,000. 

E.  M.  FULTON, 
WM.  MARSHALL, 
WM.  B.  SEWALL. 


New  York,  November  20th,  1893. 

5.  CIECULAE  NO.  2  OF  THE  EEOEGANIZA- 
TION  COMMITTEE  OF  THE  NATIOXAL 
COEDAGE   COMPANY,   TO   STOCKHOLDEES. 

Eeorganization  Committee  has  much  pleasure  in 
stating  that,  although  the  affairs  of  the  National  Cord- 
age Company  are  not  in  as  good  condition  for  imme- 
diate liquidation  as  they  appeared  to  be  on  June  21st, 
(the  date  of  the  Committee's  Circular  No.  1),  yet  the 
effect  of  the  proposed  reorganization  will  be  to  greatly 
improve  the  status  and  intrinsic  value  of  the  property 
of  the  reorganized  Cordage  Company,  thus  rendering 
more  secure  and  extended  the  basis  upon  which  the 
reorganized  Company's  securities  will  be  predicated. 

Many  leases  and  contracts  deemed  unprofitable  have 
been  abrogated.     The  reorganized  Company's  contract 


APPENDIX  XIV.  307 

relations  will  be  simplified.  The  accounts  have  been 
analyzed  and  adjusted,  and  the  absolute  title  has  been 
acquired,  or  will  be  acquired,  to  many  valuable  mills 
and  properties,  a  part  of  which  have  been  heretofore 
held  under  lease,  and  over  a  part  of  which  the  Com- 
pany has  heretofore  had  no  control. 

These  important  additions  to  the  Company's  prop- 
erty will  be  made  without  expense  either  to  the  Na- 
tional Cordage  Company  or  to  the  reorganized  Company 
through  which  it  is  proposed  to  hereafter  conduct  the 
business. 

Not  only  have  these  additional  properties  been  ac- 
quired without  expense,  but  also  by  their  acquisition 
the  indebtedness  of  the  reorganized  Company  and  its 
annual  fixed  charges  will  be  much  less  than  if  the  prop- 
erties should  be  taken  over  subject  to  the  leases  and 
burdens  which  will  thus  have  been  done  away  with. 

Among  other  additional  properties  to  be  thus  ac- 
quired are  the  eight  mills  heretofore  owned  by  the 
Security  Corporation,  referred  to  in  Circular  No.  1. 
These  mills  represent  two-fifths  of  all  the  spindles 
heretofore  controlled  by  the  National  Cordage  Com- 
pany, and  consist  of 

The  Bostox  Cordage  Mill, 
The  Staxdaki)  Cokdaoe  Mill, 
The  New  Bedford  Cordage  Mill, 
The  Middletown  Cordage  Mill, 
The  Chicago  Cordage  Mill, 
The  Lawrexce  Bopk  "Works, 
The  Field  Cordacjk  ^Iill, 
The  Ohio  Cokdaok  IMill. 


308  INDUSTRIAL   COMBINATIONS. 

These  properties  have  been  heretofore  held  by  the 
National  Cordage  Company  under  a  twenty  years' 
lease,  expiring  in  1911.  This  lease  required  the  pay- 
ment, as  rental,  by  the  National  Cordage  Company 
of  $585,000  per  annum,  besides  assessments,  taxes, 
charges,  water  rents,  expenses  of  operation  and  main- 
tenance and  insurance.  Of  this  rental,  $225,000  per 
annum  was  payable  into  a  sinking  fund,  for  the  re- 
demption and  payment  of  Security  Corporation  bonds. 
Thus  during  the  twenty  years'  term  of  the  lease,  the 
National  Cordage  Company  was  under  obligation  to 
pay  to  the  Security  Corporation  sums  which,  with 
interest  in  the  meantime,  amounted  to  over  $(3,000,000. 
As  the  Committee  regarded  the  anniial  payments  called 
for  by  this  lease  too  burdensome  for  the  reorganized 
Cordage  Company,  it  declined  tp  recommend  the  as- 
sumption or  renewal  of  this  lease.  As  the  result  of 
many  Aveeks'  negotiations,  the  Committee  has  now 
arranged,  subject  to  the  approval  of  the  holders  of 
Security  Corporation  bonds  (a  large  majority  of  whom 
have  already  given  their  approval),  to  purchase  this 
property  for  the  reorganized  Company,  freed  from  the 
$6,000,000  mortgage  now  upon  it,  and  subject  only 
to  certain  underlying  liens,  amounting  altogether  to 
about  $1,385,000,  payment  of  which  will  be  provided 
for  by  the  reorganization  plan.  This  property  is  to  be 
paid  for  by  the  use  of  $6,000,000  par  value  of  the 
Guaranteed  Stock  of  the  reorganized  Company,  thus 
ridding  it  of  over  $6,000,000  of  debt,  which  it  would 
have  assumed  if  it  had  renewed  the  lease,  and  of  the 
annual  fixed  charge  of  upwards  of  $585,000,  and  vest- 


APPENDIX    XIV.  309 

ing  it  with  the  absolute  ownership  of  these  mills. 
This  transaction  is,  therefore,  a  most  advantageons 
one  for  the  company  and  for  the  stockholders. 

Moreover,  as  stated  in  the  circnlar  to  creditors,  it  is 
expected  that  the  reorganized  Company  will  acquire 
title  to  all  the  Union  ^lills,  consisting  of  the  Sewall  & 
Day,  Chelsea,  Donnell,  Galveston,  Hanover  and  ]\Iiam- 
isburg  Mills,  which  will  materially  add  to  the  value  of 
the  Company's  mill  properties. 

The  reorganized  Company  will  be  called 

UNITED  -STATES   CORDAGE   COMPANY. 

The  new  Bonds  will  contain  a  provision  for  a  sink- 
ing fund  of  f  100,000  per  annum  after  1895,  and  it  is 
proposed  that  a  like  sum  shall  be  anniially  set  apart, 
out  of  profits  only,  and  before  payment  of  any  divi- 
dend on  the  Common  Stock,  for  the  redemption  of  the 
Guaranteed  Stock,  so  that,  in  time,  both  Bonds  and 
Guaranteed  Stock  may  be  retired. 

For  the  information  of  the  stockholders,  the  Com- 
mittee's Circular  No.  2,  to  creditors,  showing  tho  final 
plan  of  reorganization,  is  herewith  enclosed.  The  suc- 
cess of  the  reorganization  depends  upon  the  creditors' 
assent  to  the  proposition  therein  set  out. 

The  Committee  also  reminds  the  stockholders  tliat 
in  addition  to  its  equity  in  the  mills,  plants  and  ma- 
chinery, and  in  addition  to  the  new  property  of  other 
kinds,  the  reorganized  Company  will  have,  as  working 
capital,  not  only  the  contributions  of  the  stockliolders, 
but  also  all  the  assets  of  the  National  Cordage  Com- 
pany remaining  after  the  payment  of  its  debts. 


310  INDUSTRIAL  COMBINATIONS. 

Stockholders  may  be  disappointed  with  the  ap- 
praisals put  by  the  New  Jersey  Receivers  upon  the 
mills,  plants  and  machinery  inventoried  by  them.  It 
must  be  borne  in  mind,  however,  that  these  items  in 
the  inventory  did  not  include  the  mills,  plants  and 
machinery  of  either  the  Security  or  the  Union  ]\Iills. 
Besides  this,  the  Receivers'  appraisement  was  made 
upon  the  basis  of  a  forced  sale  of  dead  real  estate, 
bricks,  mortar,  wood  and  machinery.  In  their  inven- 
tory the  Receivers  say  about  this : 

"  So  far  as  the  mills,  plant  and  machinery  are  concerned, 
there  are  various  bases  of  appraisement. 

"From  the  point  of  view  of  a  solvent  corporate  owner,  they 
would  be  appraised  as  an  entirety,  as  the  going,  useful,  profit- 
earning  property  of  a  going  concern. 

"  From  the  point  of  view  of  a  creditor  of  the  Company,  they 
may  be  appraised  on  one  of  three  bases  :  — 

' '  First,  upon  the  theory  that  a  purchaser  could  be  found 
willing  and  able  to  purchase  the  whole  property,  at  an  adequate 
price,  with  a  view  of  continuing  to  operate  it  in  the  cordage 
business. 

"  Second,  upon  the  theory  that  there  is  no  purchaser,  at  an 
adequate  price,  for  the  whole  of  the  property,  but  that  separate 
purchasers  can  be  found  for  the  sevei-al  mills,  who  will  each 
buy  those  mills  with  a  view  of  continuing  the  cordage  business 
theretofore  carried  on  at  those  mills. 

"Third,  upon  the  theory  that  the  mills  must  be  sold  sepa- 
rately, at  forced  sale,  upon  a  given  date,  without  regard  to  the 
future  use  to  be  made  of  them. 

"  The  Receivers  are  of  the  opinion  that  no  purchaser  for 
these  properties  can  be  found  upon  the  first  of  the  above  theories, 
unless  such  purchase  should  be  made  as  a  part  of  the  voluntary 
reorganization  of  the  Company  by  the  creditors  and  stockhold- 


APPENDIX   XIV.  311 

ers.  They,  therefore,  do  not  feel  called  upon  to  express  any 
opinion  as  to  tiie  probable  value  of  the  mills,  plant  and  machin- 
ery upon  this  theory. 

"The  Receivers  are  also  of  the  opinion  that  there  are  not  a 
suf3Eicient  number  of  persons  familiar  with  or  desiring  to  engage 
in  the  cordage  business  to  justify  them  in  expecting  to  effect  a 
sale  upon  the  second  of  the  above  theories.  They,  therefore, 
do  not  regard  it  as  a  part  of  their  duty  to  express  an  opinion  as 
to  the  probable  value  of  the  mills,  plants  and  machinery  upon 
this  theory. 

"  Therefore,  in  arriving  at  the  appraisals  shown  in  tlie  follow- 
ing inventory,  the  Receivers  have  acted  solely  ujjon  the  third 
theory  above  mentioned.  Their  appraisals  are  based  solely 
upon  what  they  have  reason  to  believe  would  be  the  actual  cost 
of  purchasing  the  ground  upon  which  the  mills  stand  and  of 
erecting  and  equipping  those  mills,  less  a  proper  deduction  for 
depreciation.  This  appraisal  is  based  upon  the  assumption  that 
approximately  these  piuces  could  be  obtained  upon  a  forced  sale 
of  these  properties,  in  separate  parcels,  on  a  given  date,  and 
without  regard  to  the  fact  that  they  have  together  formed  one 
entire  manufacturing  property. 

"  While  the  Receivers  are  of  the  opinion  that  the  amount  of 
such  an  appraisal  would  be  very  largely  increased  if  based  upon 
either  of  the  first  or  second  of  the  theories  above  mentioned, 
and  while  they  are  also  of  the  opinion  that  the  good-will  of  the 
business  represented  by  these  combined  mills,  if  owned  by  a 
solvent,  properly  managed  corporation,  would  be  a  very  great 
one,  yet  as  neither  of  these  increments  of  value  forms  a  part  of 
the  appraisal  which  they  understand  it  to  be  their  duty  to  make, 
they  express  no  opinion  as  to  the  amount  by  which  their 
appraisals  would  be  increased  if  these  things  were  taken  into 
consideration." 

Tf  till'  Sccui'ity  and  IJiiion  Mills  slioiild  Ix-  a]ii)raisc'(l 
iilMiii  the  saiiii'  Itasis  as  llir  alinvc,  tlir  ciitiir  mill 
|ii'ii|)rrt\   ami  ^'ooil-will  wiiiiM.  in   tlii'  judgnu-iit.  of  the 


312  INDUSTRIAL   COMBINATIONS. 

Committee,  furnish  ample  security  for  the  proposed 
new  bonds. 

The  Committee  does  not  think,  however,  that  this  is 
a  proper  basis  of  appraisement  from  the  stockhoklers' 
point  of  view.  As  none  of  its  members  are  practical 
cordage  men,  the  Committee  does  not  undertake  to  ex- 
press an  opinion  concerning  the  real  value  of  the  prop- 
erties and  good-will  of  the  business  of  the  reorganized 
Company.  It  is  of  opinion,  however,  that  in  ascertain- 
ing such  value,  the  facts  shoidd  be  considered  that 
these  properties  will  be  properties  of  a  going  concern, 
and  that  they  will  be  united  and  operated  imder  a 
single  management. 

At  the  request  of  some  of  the  larger  stockholders, 
the  Committee  encloses  with  this  an  appraisal  which 
has  been  made  for  these  stockholders. 

The  mill  properties,  which  will  be  owned  or  con- 
trolled by  the  United  States  Cordage  Company,  are : 

L.  Waterburt  &  Co., 

William  Wall's  Sons, 

Tucker  &  Carter  Cordage  Company, 

Victoria  Cordage  Company, 

Xenia  Twine  &  Cordage  Company, 

J.  Rinek's  Sons, 

Lawrence  Rope  Works, 

Boston  Cordage  Company, 

Standard  Cordage  Company, 

New  Bedford  Cordage  Company, 

MiDDLETOWN    TwiNE    COMPANY, 

Miamisburg  Cordage  Company, 


APPENDIX  xrv.  313 

Chicago  Cordage  Company  (formerly  Wm.  Deering 
&  Co.), 

American  Cordage  Company  (formerly  Field  Cord- 
age Company), 

Ohio  Twine  &  Cordage  Company, 

Sewell  &  Day  Cordage  Company, 

Chelsea  (formerly  Suffolk)  Cordage  Company, 

Donnell  Cordage  Company, 

Galveston  Rope  and  Twine  Company, 

Hanover  Cordage  Company,  Ltd., 

Elizabethport  Cordage  Company, 

MiAMisBURG  Binder  Twine  &  Cordage  Comp^iny. 

Besides  the  foregoing,  there  will  he  various  dis- 
mantled and  dormant  mill  properties  purchased  by 
the  National  Cordage  Company,  in  order  to  acquire 
their  lousiness. 

It  is  a  noticeable  fact  that  the  creditors  and  stock- 
holders of  the  company  have  cordially  and  harmoni- 
ously united  with  the  Committee  in  the  i)roi)osed 
reorganization,  and  that  no  attempt  has  been  made,  l)y 
litigation  or  otherwise,  to  impede  the  reorganization, 
and  (taking  into  consideration  the  embarrassing  com- 
plications which  have  been  dealt  with)  the  Committee 
congratulates  the  stockholders  upon  what  promises  to 
be  a  satisfactory  adjustment  of  their  interests. 

The  Committee  therefore  expects  to  complete  the 
reorganization  by  the  organization  of  the  United  States 
Cordage  C-ompany  within  the  present  year. 

The  new  Board  of  Directors  of  the  United  States 
Coi'dage  Comi)aiiy  has  liccn  partially  selected.     Among 


314  INDUSTRIAL   COMBINATIONS. 

them  will  be  the  members  of  the  Advisory  Committee, 
Messrs.  George  G.  Williams,  George  S.  Coe  and 
W.  W.  Sherman,  who,  at  the  special  request  of  the 
Reorganization  Committee,  have  consented  to  serve 
for  the  first  year  as  the  representatives  of  creditors 
and  bondholders.  Among  them  also  will  be  Mr. 
E.  F.  C.  Young,  one  of  the  Receivers,  and  the  mem- 
bers of  the  Reorganization  Committee.  The  Board 
will  consist  of  not  more  than  fifteen  members. 

GEORGE  C.  MAGOUN,   "i        „  .      . 

ERNST   THALMANX,       I       ^^orgamzation 
GUSTAV  H.  GOSSLER,  J  Com7mttee. 


New  York,  Navember  20th,  1893. 

6.  CIRCULAR  NO.  2  OF  THE  REORGAXIZA- 
TION  COMMITTEE  OF  THE  NATIONAL 
CORDAGE  COMPANY,   TO   CREDITORS. 

PROPOSED  MODIFIED  PLAN  OF  SETTLEMENT  WITH 
CREDITORS, 

Involving  the  sale  or  transfer  of  all  the  Assets  of  the 
National  Cordage  Company,  and  their  application,  in 
the  first  instance,  to  the  pjayment  of  its  debts. 

This  also  involves  the  purchase  by  the  Reorganized 
Company  of  the  Eight  Security  31111%  the  Cancellation 
of  the  existing  f  6,000,000  Mortgage  on  these  Mills,  and 
the  issuance  of  stock  in  lieu  of  the  Bo)ids  secured  thereby. 

THE    REORGANIZED    COMPANY    WILL    BE    CALLED 

UNITED   STATES  CORDAGE   COMPANY. 


APPENDIX   XIV.  315 

PROPOSED    SETTLEMENT    WITH    UNSECURED 
CREDITORS. 

Pay  25  per  cent,  of  the  unsecured  debt  in  cash  by 
January  31st,  1894.  This  will  exhaust  the  unpledged 
merchandise  and  cash  assets,  leaving  Accounts  Receiv- 
able and  other  items  to  be  disposed  of  as  below : 

Pay  65  per  cent,  of  the  unsecured  debt  by  January 
31st,  1894,  in  bonds  at  par  of  the  United  States  Cord- 
age Company  (which  shall  be  part  of  an  authorized 
issue  of  $7,500,000  30-year  six  per  cent,  gold  bonds), 
secured  by  a  mortgage  on  all  the  mills  and  realty, 
plant,  machinery,  good-will,  trade-marks,  brands  and 
patents,  acquired  and  to  be  acquired,  also  by  pledge 
of  all  stocks  of  other  Cordage  companies  OAvned  by 
the  United  States  Cordage  Company.  These  bonds 
will  be  dated  January  1st,  1894. 

Pay  10  per  cent.  ($875,581)  of  the  face  of  the  total 
unsecured  debt,  and  interest  on  the  total  unsecured 
debt,  in  Trust  Liquidation  Certificates,  secured  by  a 
.pledge  of  all  the  Accounts  Receivable  and  other  per- 
sonal assets  of  the  National  Cordage  Company  remain- 
ing after  providing  for  the  25  per  cent,  payment  in 
cash,  and  the  expenses  of  receivership  and  reorganiza- 
tion. 

These  ])ledged  Assets  will  be  liquidated  as  rapidly 
as  possible.  The  Trust  Liquidation  Certificates  will 
entitle  the  holder  to  his  pro  rata  share  of  the  proceeds 
of  tliese  ]dodged  Assets  to  an  aniouiit  not  exceeding 
this  10  ])('r  ciMit.  and  interest. 

These  pledged  Accounts  Receivable  and  other  per- 


316  INDUSTRIAL   COMBINATIONS. 

sonal  assets  are  classified  by  the  Committee,  as  fol- 
lows : 

Slow,  but  considered  good $1,111,762 

Slow  and  doubtful,  of  the  face  value  of  .$1,851,076 

but  probably  good  for 600,000 

$1,711,762 

SECURED   CREDITORS. 

The  Committee  has  arranged  with  a  majority  in 
value  of  the  secured  creditors,  and  expects  to  arrange 
with  all  secured  creditors,  for  the  gradual  liquidation 
of  their  merchandise  collateral,  through  the  United 
States  Cordage  Company  at  prices  to  be  agreed  upon, 
and  the  acceptance  of  payment  for  their  deficiency,  if 
any,  in  these  Trust  Liquidation  Certificates. 

We  recommend  the  prompt  acceptance  of  the  above 
proposition.  It  is  the  best  settlement  of  which  the 
condition  of  the  company  permits. 

GEORGE   C.   MAGOUN, 
ERNST  THALMANN, 
GUSTAV   H.   GOSSLER, 

Reorganization  Committee. 

To  the  Creditors  of  the  National  Cordage  Company : 

The  Eeorganization  Committee  has  submitted  to  us 
in  detail  a  statement  of  the  condition  and  affairs  of 
the  National  Cordage  Company  which  we  have  exam- 
ined with  care.  We  fully  concur  in  the  conclusions 
reached  by  the  Reorganization  Committee,  as  stated  in 
its  Circvilar  No.  2,  and  we  recommend  to  all  creditors 
the  immediate  acceptance  of  the  plan  of  settlement 


APPENDIX  xrv.  317 

proposed.  It  is  our  opinion  that  this  adjustment  is 
not  only  most  equitable  and  fair  to  all  concerned,  but 
also  that  it  is  the  best  that  can  be  made  under  the 
circumstances. 

GEORGE  G.  WILLIAMS,  Pres.  Chemical  Nat.  Bank. 

GEORGE  S.  COE,  Pres.  Amer.  Exchange  Nat.  Bank. 

W.  W.  SHERMAN,  Pres.  Nat.  Bank  of  Commerce. 

Advisory  Committee. 

To  the  Creditors  of  the  National  Cordage  Company  : 

As  Receivel's  of  this  Company,  we  hereby  concur  in 
the  recommendation  for  the  adjustment  of  all  liabili- 
ties of  the  National  Cordage  C'ompany,  as  proposed 
by  the  Reorganization  Committee.  In  recommending 
the  immediate  and  unanimous  approval  and  acceptance 
of  the  settlement  proposed,  we  do  so  in  the  interest  of 
the  creditors  at  large,  and  believing  that  in  no  other 
way  they  could  expect  to  obtain  as  favourable  a  liqui- 
dation of  their  claims,  as  the  liabilities  of  the  Com- 
pany, and  its  varied  interests,  are  too  large  to  be 
adjusted  favourably  through  any  other  procedure  than 
through  the  proposed  reorganization  and  adjustment. 

E.  F.   C.   YOUNG, 

G.   WEAVER   LOPER, 

Seceivers. 

Various  changes  in  the  very  complicated  affairs  of 
the  National  Cordage  Company  which  have  taken  place 
since  June  21st,  1893  (the  date  of  our  Circular  No.  1), 
will  prevent  the  Receivers  and  the  Reorganization 
Committee  from  carrying  out  the  settlement  then  pro- 
posed.    A  new  form  of  settlement  is  necessary,  which, 


818  INDUSTRIAL   COMBINATIONS. 

however,  is  believed  to  be  a  better  settlement  for  tlie 
body  of  creditors  than  the  one  originally  proposed. 

The  settlement  now  proposed  means  the  application 
of  all  the  assets  of  every  sort,  in  the  first  instance,  to 
the  payment  of  debts. 

This  change  in  the  form  of  settlement  has  become 
necessary  for  the  following  reasons  : 

The  time  for  proving  claims  before  the  Receivers 
expired  on  August  31st,  1893,  and  on  that  date  and 
since  a  number  of  claims  Avere  filed,  including  claims 
for  breach  of  various  contracts,  such  as  leases,  manu- 
facturing, employment,  sales,  etc.,  not  appearing  on 
the  books  as  liabilities,  which  swelled  the  demands 
against  the  Company  to  a  sum  considerably  larger 
than  had  been  anticipated. 

Moreover,  a  large  number  of  debts,  upon  which  the 
Company  was  only  contingently  liable  as  endorser, 
and  which,  therefore,  did  not  appear  in  the  accounts 
as  liabilities,  and  which  were  not  expected  to  become 
liabilities,  have  become  actual  liabilities  by  the  failure 
and  default  of  the  principal  debtors. 

A  large  shrinkage  in  both  pledged  and  unpledged 
merchandise  and  other  assets  has  also  occurred  through 
the  unprecedented  decline  in  the  prices  of  fibres,  rope 
and  twine,  and  this  loss  was  made  still  greater  by  the 
fact  that,  after  the  Receivers  took  possession,  orders 
for  twine,  previously  given  to  the  Company,  were 
cancelled  to  the  extent  of  many  thousand  tons. 

The  financial  depression  also  caused  failures  among 
the  Company's  customers,  which  rendered  numerous 
accounts  slow,  doubtful  or  bad,  which  on  June  21st 
were  considered  good  and  quick  assets. 


APPENDIX   XIV.  319 

These  facts  and  the  maturing  of  certain  nnderlying 
lions  on  various  mill  properties  have  increased  the 
total  debt  by  the  snm  of  $1,609,374,  and  made  it  too 
large  to  be  })ai(l  in  bonds  at  80,  as  originally  ])ro])Osed. 
For  this  reascjn  no  allotment  has  been  made,  and  no 
liability  has  been  inciirred  nnder  the  underwriting 
agreements  by  the  signers  thereof. 

The  nnderlying  liens  on  the  various  properties  are 
$1,385,000  on  the  Security  Mills  (now  proposed  to  be 
jjurchased),  and  $728,000  on  the  Union  Mills,  in  addi- 
tion to  interest  on  both  items.  Al)Out  $4r)(),000  of  this 
sum  must  be  paid  this  year,  and  is  treated  as  a  part  of 
the  present  debt.  To  provide  for  these  Security  liens, 
among  other  things,  the  authorized  issue  of  bonds 
must  be  increased  from  $6,000,000  to  $7,500,000. 
There  is  also  a  mortgage  of  $250,000  upon  another  of 
the  Company's  mills  which  was  contracted  to  be  con- 
veyed to  it  free  of  incumbrance,  which  amount  the 
Receivers  claim  from  the  vendors  of  the  property. 

On  Octolxn-  27th,  1803,  the  Receivers  filed  a  detailed 
inventory,  taken  as  of  the  date  of  June  30th,  1893, 
being  their  first  inventory.  This  shows  assets  aj)- 
praised  by  them  at  $12,601,561,  and  liabilities  as  of 
June  30th,  1893,  of  $11,650,617,  and  contingent  lia- 
bilities of  $1,039,826. 

On  Sei)tember  30th,  1893,  another  inventory  was 
made,  and  a  statement  of  assets  and  liabilities  as  of 
tliat  date  has  ]>een  made  u])  by  Mr.  Seaward,  Accountant 
of  th(^  Receivers. 

Until  aftei-  the  completion  of  this  inventory  of 
September  30th,  1893,  and  until  after  an  examination 


320  INDUSTRIAL   COMBINATIONS. 

of  the  claims  filed  against  the  Receivers  and  of  the 
Receivers'  appraisements  shown  by  their  inventory 
filed  on  October  27th,  1893,  it  was  impracticable  for 
the  Reorganization  Committee  to  formulate  a  new 
proposition  for  settlement. 

In  the  meantime,  however,  the  Committee  has  used 
every  effort  to  complete  a  plan  of  reorganization,  the 
success  of  which  depends  upon  a  voluntary  settlement 
by  the  creditors,  but  which  will  put  the  reorganized 
Company  in  possession  of  property  and  business  of 
much  greater  value  than  that  of  the  present  Company 
before  its  failure. 

While  the  changes  above  referred  to  have  seriously 
diminished  the  proportion  of  quick  assets  to  unsecured 
liabilities,  and  have  therefore  correspondingly  dimin- 
ished the  present  paying  capacity  of  the  assets,  never- 
theless, the  slow  assets  remain,  and  can  be  utilized  in 
time  and  with  judgment  to  the  advantage  of  creditors, 
while  the  mills,  plants,  machinery  and  good-will  of 
the  reorganized  company  can  be  made  available  as 
valuable  security  for  the  bonds  offered  in  settlement. 

Mr.  John  Scott,  on  behalf  of  the  Committee,  has 
carefully  examined  the  work  of  the  Accountant  above 
referred  to,  as  well  as  the  claims  filed  and  the  allow- 
ances which  the  Committee  thinks  will  be  made,  and 
advises  the  Committee,  that,  subject  to  future  proof 
of  claims,  not  now  known  or  anticipated,  and  subject 
to  possible  variations  resulting  from  the  Receivers' 
allowance  or  disallowance  of  claims  proved,  the  follow- 
ing figures  are  correct,  as  of  September  30th,  1893 : 


APPENDIX   XIV.  321 

ASSETS. 

Real  estate,  mills,  plant  and  ma- 
chinery (not  including  good-will, 
trade-marks,  etc.)i  in  New  Jersey 
Receivers'  possession,  and  appraised 

by  them  at $2,934,388 

Stocks  of  other  Cordage  Companies,  in 
lieceivers'  possession,  and  appraised 

by  them  at 679,300 

Mercliandise 4,880,884 

Notes  Receivable 273,303 

Accounts  Receivable  2 3,596,691 

Mill  Supplies 60,000 

Security  Corporation  bonds 303,624 

Cash 326,109 

Claims  against  various  parties 595,463    ^13,649,822 

Less  pledged  assets 4,839,978 

Free  assets 8,809,844 

LIABILITIES. 

Debts  as  per  books $12,251,792 

Claims  filed,  subject  to  ad- 
justment and  allo\»ance, 

estimated ^uOOjOOO 

Liens  due  this  year 456,000 

Contingencies  and  expenses, 

estimated 388,000      1,344,000 

Total  debt .$13,595,792 

Value  of  Collateral  pledged,  as  of 
September  30th,  1H9:^>,  to  be  applied 

in  payment  of  secured  debt 4,839,078 

Unsecured  debt 8,755,814 

Apparent  surplus §64,030 

>  This  item  does  not  incliule  theeipht  Si-curity  Mills  iior  the  fivt'  T'liion  Mills. 
'  This  includes  the  assets  expected  to  be  received  Iroiii  the  Uostun  Ueceivers 
as  i>art  of  tlie  reorganization. 

T 


322  INDUSTRIAL   COMBINATIONS. 

The  pledged  assets  ($4,839,978)  include  certain  ac- 
counts and  notes  receivable,  Security  bonds,  and  also 
certain  merchandise,  the  latter  being  of  the  appraised 
value  of  $4,100,489. 

For  the  purpose  of  raising  the  cash  necessary  to 
pay  the  25  per  cent,  offered,  in  addition  to  the  cash  in 
hand,  there  is  available  free  merchandise  amounting  to 
$780,395,  and  the  unpledged  accounts  and  notes  receiv- 
able, and  the  mill  supplies. 

In  this  way  all  the  free  assets,  except  those  rep- 
resenting the  mill  properties  and  good-will,  will  be 
applied  to  the  payment  of  35  per  cent,  of  the  face  of 
the  unsecured  debt  and  interest,  and  the  pledged  assets 
will  be  applied  to  the  payment  of  the  secured  debt. 
The  remaining  assets,  representing  the  mill  properties 
and  good-will,  and  also  the  new  mill  properties  to  be 
acquired,  will  be  mortgaged  to  secure  the  payment  of 
the  bonds  mainly  used  in  paying  the  remaining  65  per 
cent,  of  the  unsecured  debt. 

Thus  the  entire  assets  of  the  company  will  be  utilized 
in  the  payment  of  its  debts. 

The  above  assets,  amounting  to  $13,649,822,  are  not 
all  available  for  immediate  liquidation  of  debts,  because 
they  cannot  now  be  converted  into  cash  at  adequate  j^i'ices. 
For  instance,  among  them  are  slow  and  doubtful  assets 
of  the  face  vcdue  of  $2,962,838,  lohich  cannot  he  consid- 
ered for  j^^^i'poses  of  i:)resent  payment,  but  lohich  are 
believed  to  be  ultimately  good  for  $1,711,762.  Nor  can 
the  item  of  mills,  plant,  machinery,  &c.,  amounting  to 
$2,934,388,  nor  the  item  of  stocks  of  other  mills,  amount- 
ing to  $697,300,  be  advantageously  turned  into  cash  for 


APPENDIX   XIV.  323 

the  purposes  of  immediate  liquidation.  Nor  can  it  be 
ascertained,  at  present,  how  much  can  be  collected  of 
the  item  of  claims  against  various  iKirties,  amounting 
to  f  595,463. 

In  short,  $6,566,860  of  the  unsecured  (lel)t,  and  the 
interest,  must  be  provided  for  by  bonds  and  Trust 
Liquidation  Certificates,  and  provision  must  also  be 
made  for  $1,()57,00()  of  underlying  liens  on  various 
properties,  which  mature  at  various  times  during  the 
ensuing  ten  years,  and  which  are  not  included  in  the 
above  item  of  total  debt. 

If  an  attempt  shoidd  be  made  to  pay  the  present 
debt  at  the  present  time,  at  forced  sale,  out  of  the 
present  assets,  it  is  obvious  that  creditors  could  not  be 
paid  in  full,  and  a  forced  sale  would  so  materially 
reduce  the  above  appraised  value  of  the  assets  as  to 
pay  an  unsatisfactory  dividend  to  creditors. 

The  market  price  of  good-will,  at  a  forced  sale  of  a 
dismembered  property,  is  so  problematical  that  it  is 
not  appraised. 

THE   SECURITY  MILLS. 

The  eight  mills  of  the  Security  Corporation  have 
heretofore  been  operated  under  a  lease,  wliicli  re- 
quired the  yearly  ])ayment  for  twenty  years  by  the 
National  Cordage  Company  to  the  Security  Corporar 
tion  of  $585,()()0  annual  rental.  The  payments,  if 
continued,  would  retire  the  Security  Corporation  bonds 
of  ■«!( ;,0( )().()( )()  witli  interest,  at  the  end  of  tlie  lea,se. 

Althougli  tlicse  mills  formed  an  im])ortant  jiart  of 
the  Cordage  Company's  operated  plant,  it  was  obvious 


324  INDUSTRIAL   COMBINATIONS. 

that  the  terms  of  the  lease  were  too  burdensome  for  the 
reorganized  Company.  The  Committee  has  therefore 
completed  arrangements  for  a  conveyance  of  the  title 
of  the  Security  Mills  to  the  reorganized  Company, 
subject  to  the  approval  of  the  holders  of  the  bonds  of 
the  Security  Corporation.  A  large  majority,  in  value, 
of  these  bondholders  have  already  assented  to  this 
conveyance,  which,  when  made,  will  be  free  from  the 
lien  of  the  mortgage  of  the  Security  Corporation  of 
$6,000,000,  and  will  be  subject  only  to  underlying 
liens  in  the  nature  of  purchase-money  mortgages 
amounting  altogether  to  $1,385,000,  payment  of  which 
will  be  provided  for  by  the  reorganization.  It  is  con- 
fidently expected  that  the  necessary  consent  will  be 
obtained  from  all  the  holders  of  Security  Corporation 
bonds. 

In  giving  this  consent,  however,  the  holders  of  the 
Security  Corporation  bonds  have  expressly  stipulated 
that  bonds  of  the  reorganized  company  shoidd  not  he 
issued  to  creditors  at  less  than  par,  and  that  the  whole 
issue  should  not  exceed  $7,500,000. 

This  agreement,  if  consummated,  will  place  the  eight 
Security  Mills  (the  Boston,  Standard,  jSTew  Bedford, 
Lawrence,  Middletown,  Chicago,  Ohio  and  American) 
under  the  mortgage  made  to  secure  the  bonds  of  the 
reorganized  Cordage  Company,  and,  when  the  Union 
Mills  are  acquired,  will  make  it  a  mortgage  upon 
twenty -two  mills  (instead  of  upon  twelve,  as  originally 
proposed).  It  will  reduce  the  fixed  annual  charges  by 
the  sum  of  $585,000,  and  will  relieve  the  reorganized 
Cordage  Company  from  burdensome  restrictions  con- 


APPENDIX    XIV.  325 

tained  in  the  Security  lease  and  mortgage,  and  so  per- 
mit of  greater  economy  in  managing  and  operating  the 
mills. 

By  the  provision  made  in  the  reorganization  for 
imderlying  liens,  it  is  also  expected  that  the  reorgan- 
ized Company  will  acquire  title  to  the  Union  Mills, 
ownership  in  a  part  of  which  has  been  heretofore  rep- 
resented by  capital  stocks  of  corporations  owning  these 
properties.  The  remaining  portion  of  these  capital 
stocks  is  now  pledged  to  sec\ire  payment  of  the  under- 
lying liens  on  these  properties. 

The  stockholders  of  the  National  Cordage  Company 
have,  with  practical  unanimity,  submitted  to  an  assess- 
ment on  their  stock  (.'$20  on  each  preferred  share,  and 
$10  on  each  common  share),  and  have  paid  in  their 
contributions  for  working  capital  for  the  new  company. 
The  amount  already  paid  in  cash  is  in  excess  of 
$2,700,000,  and  this  is  expected  to  be  increased  to 
nearly  .f  ;!,000,000. 

This  fund,  while  not  available  for  the  [layment  of 
debts  of  the  old  company,  will  be  in  the  treasury  of 
the  new  company,  and  will  greatly  strengthen  its  re- 
sources and  credit  and  supply  it  witli  working  capit;!]. 

The  Committee  also  calls  attention  to  the  fact  that 
in  addition  to  the  new  real  property  of  value  which 
will  be  acquired  for  the  new  Company,  several  burden- 
some contracts  of  various  kinds  will  be  abrogated  or 
modified,  the  accounts  and  system  of  business  will  be 
much  sim})lifie(l,  the  expenses  will  be  much  reduced, 
all  of  which  will  also  add  to  the  value  of  the  bonds  of 
the  reorganized  Company. 


326  INDUSTRIAL   COMBINATIONS. 

These  facts  render  the  bonds,  now  proposed  to  be 
issued,  so  much  more  valuable  than  the  bonds  orig- 
inally proposed,  that  they  should  be  available  at  par 
for  the  payment  of  debts. 

The  only  alternative  to  this  proposition  is  the  dis- 
memberment of  the  properties  and  their  sale  in  judicial 
proceedings,  which  would  produce  most  unsatisfactory 
results. 

The  Reorganization  Committee  therefore  most  re- 
spectfully urges  all  creditors  to  assent  to  the  plan 
herein  proposed  before  December  1st,  1893,  and  re- 
quests the  creditors  to  sign  and  forward  the  enclosed 
assent  as  soon  as  possible. 

The  Committee  intends  to  proceed  with  this  reor- 
ganization on  or  about  December  1st,  1893,  by  the 
organization  of  a  new  company  to  carry  on  the  former 
business  of  the  National  Cordage  Company. 

This  Company  will  be  called  the  United  States 
Cordage  Company. 

In  what  it  has  heretofore  said  the  Committee  has 
treated  the  situation  as  it  must  be  viewed  by  a  creditor 
desiring  prompt  settlement. 

The  valuations  which  it  has  been  obliged  to  adopt 
for  this  purpose  are  radically  different  from  the  valu- 
ations which  would  be  put  upon  the  same  properties 
as  properties  of  a  going  concern,  owned  and  operated 
by  a  solvent  corporation ;  and,  in  particular,  they  rep- 
resent, on  the  basis  here  adopted,  much  less  value  than 
will  be  represented  by  the  enlarged,  increased  and 
harmoniously  consolidated  properties  expected  to  be 
obtained  for  the  reorganized  Cordage  Company,  as  will 


APPENDIX   XIV.  327 

appear  from  the  Committee's  Circular  No.  2,  to  stock- 
holders, enclosed  with  this. 

T7ie  Committee  recommends  the  acceptance  of  the  settle- 
ment herein  proposed.  It  is  the  best  settlement  of  ichich 
the  condition  of  the  company  permits.  In  saying  this, 
it  reminds  you  that  its  members  are  themselves  creditors, 
and  also  the  agents  of  other  creditors,  and  that  the 
Advisory  Committee  of  Bank  Presidents,  ivhose  recom- 
mendation  is  hereto  attached,  were  apypointed  to  represent 
all  creditor  banks. 

GEORGE   C.   MAGOUN,  1  „  .     ^. 

ERNST  TIIALMANN,       I  ^^orgamzatwn 
GUSTAV  H.   GOSSLER,         (Committee. 


328 


INDUSTRIAL   COMBINATIONS. 


APPENDIX   XV. 


PARTIAL  LIST  OF  TRADE  COMBINATIONS  AND 
COALITIONS  ACHIEVED  OR  ATTEMPTED,  AND 
OF  THE  COMMODITIES  COVERED  BY  THEM  IN 
THE    UNITED    STATES. i 


Stove-boards,  zinc,  national,  1890. 
Stoves  and  ranges,  1872. 
Stoves,  vapour,  national,  1881. 

II.  —  CHEMICALS. 

Acids,  acetic,  citric,  muriatic,  ni- 
tric, sulijhuric,  American,  1889. 

Alkaloids. 

Alum,  sectional,  1889. 

Ammonia,  1889. 

Bismuth  salts. 

Boracic  acid. 

Borax. 

Chloroform. 

Drug  manufacturers. 

Iodoform,  1880. 

Lime,  acetate  of,  1891. 

Mercurials:  as  calomel,  corro- 
sive sublimate,  etc. 

Paris-green,  1889. 

Potash:  bichloride  of. 

Quinine,  international,  1893. 

Rochelle  salts. 

Saltpetre. 

Santonine. 

Soda,  bichromate. 

1  From  n.  S.  Lloyd.  "  AVealth  against  Coininonwe.alth,"  pp.  5.37-544;  the 
information  is  derived  from  Lloyd's  most  v.alu.able  collection  of  newspaper  clip- 
pings.   Some  additions  have  been  made  by  the  author. 


I.  —  LIGHT,    HEAT,    AND    POVTER. 

Boilers,  for  house  heating. 

Candle-makers. 

Coal :  anthracite,  bituminous. 

Coke. 

Electric :  carbon  points,  1885 ; 
candles,  1888;  electric  goods, 
national,  1887;  lighting,  1882; 
light-fixtures,  national,  1889. 

Gas:  illuminating  and  fuel,  local, 
sectional,  national;  fixtures, 
national ;  pipes,  1875 ;  natural. 

Gasoline  stoves,  1894. 

Governors  of  steam-boilers. 

Hot-water  heaters,  1892. 

House  furnaces,  1889. 

Kerosene,  1871. 

Kindling  wood,  Boston,  1891. 

^Matches:   international,  1894. 

Paraffine. 

Petroleum  and  its  products,  1874. 

Radiators,  steam  and  hot-water. 
Western,  1891. 

Steam  and  hot-water  master  fit- 
ters, national,  1889. 

Stearine. 


APPENDIX   XV. 


329 


Strychnine. 
Ultramarine. 

Vitriol,  1889. 

III.  —  METALS. 

Aluininuni,  national,  1888. 

Barbed  wire,  1881. 

Brass:  sectional,  1884;  rolled 
and  sheet,  sheet  German  sil- 
ver, copper  rivets  and  bnrrs, 
copper  and  German-silver  wire, 
kerosene-oil  burners  and  lamp 
trimmings,  and  braised  brass 
tubing. 

Copp(M':  ("old,  bolt,  rolled,  sheet, 
1.S88 ;  ore,  Lake  Superior,  1879 ; 
internationsil,  1887;  bath-tubs, 
boilei's,  sinks,  and  general  ware, 
1891 ;  wire. 

Iron:  founders;  galvanized,  na- 
tional, 187.");  malleal)le,  na- 
tional, 1882;  nuts,  1884;  ore, 
Atlantic  coast,  188(),  Michigan, 
]8S'_>,  Southern,  188t,  North- 
western, 1887,  Lake  Superior, 
189;{;  i)ig,  Eastern,  Soutluu-n, 
188;>,  national,  1889;  pii)es, 
steam  and  gas,  1884 ;  wrought 
iron,  1887  ;  structural,  national, 
1881;  tiii)es,  1884;  wire-cloth, 
luUional,  1882. 

Lead  :  pig,  i)ii)e  ;  slieet-lead,  1888 ; 
white,  national,  1884. 

Mica,  nation.'il,  1887. 

Nickel. 

(.>uicksilver,  California. 

Silver  and  lead  smelters. 

Silver  mines,  Colorado,  1894. 

Steel:  armour-plate,  Bessemer 
beams  (in  existence  nearly 
thirty  years),  castings,  1894; 
galvanized  ;  rails  (see  Trattic 
and  Travel);  rods,  Cuitefl 
States,  1888;    rolling-mills. 


Tin :     jobl)ors ; 
tional,  188.S. 
Zinc. 


American,     na- 


IV.  —  SOME  OTHER  INSTRUMENTS 
AND  MATERIALS  OF  INDUSTRY. 

Alcohol. 

Axes  and  axe-poles. 

Belting,  leather,  rubber. 

Blankets  (press),  American  Pa- 
per-makers' Felt  and  .lacket 
Association. 

Bobbins,  spools,  and  shuttles, 
188(),  for  cotton,  woollen,  silk, 
and  linen  mills. 

Bolts,  1884. 

Boxes,  wooden,  local,  188.");  West- 
ern and  Southern. 

Bridge-builders:  Eastern,  18S(); 
Iowa,  Nebraska,  Kansas,  Mis- 
souri, 1889. 

Butchers"  skewers  and  supplies, 
Western,  ISSii. 

Carpet  yarns.  Eastern,  18S9. 

Cash-registers,  national,  18".K). 

C(;lluloid,  lythoid,  zylonite.  East- 
ern, IH'H)". 

Chains,  national,  188.'{. 

Cordage:  rope,  twine,  187.");  na- 
tional, 1890. 

Corks. 

Cotton  (lurk,  n.-ilional,  18>.iL 

(lotlon-secd  oil,  national.  1.S81. 

Creels,  for  cloth  and  uihiIIih 
mills,  national.   189.). 

I'auiasks,  I'cnnsyl vania,  188(i. 

Enn-rj'  wheels,  national. 

Felting. 

Fibre,  indurated,  jmils,  bowls, 
measures,  water-coolers,  fil- 
ters, etc.,  national,  188b. 

Files,  1.S7.-.. 

Fire-brick,  1875. 


330 


INDUSTRIAL   COMBINATIONS. 


Fish-oil,  menhaden,  New  Eng- 
land, 1885. 

Forge  companies,  national,  1889. 

Glass  bottles:  beer,  United 
States,  1884. 

Glass:  tlint,  "Western,  1891; 
crown,  cylinder,  unpolished ; 
international,  1890;  window, 
1875;  sectional,  national,  in- 
ternational, 1884. 

Glass,  plate,  Underwriters,  1894. 

Glue. 

Gutta-percha. 

Hardware  manufacturers,  1884. 

Label  printers. 

Leather:  belting, national;  board, 
national,  1891;  hides.  North- 
western, 1888;  morocco.  East- 
ern, 1886;  patent,  national, 
1888;  sole,  1893;  Tanners'  As- 
sociation, 1882;  Oak  Harness 
Leather  Tanners,  national, 
1890. 

Linen  mills.  Eastern,  Western, 
1892. 

Linseed  oil :  local,  1877 ;  national, 
1887. 

Manilla,  international,  1887. 

Oil:  lubricating,  1874;  for  cur- 
ing leather ;  menhaden ;  safety 
burning  oil  for  miners. 

Paper:  local, sectional,  national; 
bags,  Eastern  and  "Western, 
1887 ;  book  and  newspaper ; 
boxes,  national,  1883;  card- 
board, 1890;  flour  sacks,  1887; 
straw;  tissue,  1892;  wrapping, 
"SVestern,  1878,  Eastern,  1881; 
writing,  national,  1884.  Pa- 
per-makers' Felt  and  Jacket 
Association,  national;  rags, 
Eastern,  1883;  wood-pulp, 
"Western,  1890;  New  York, 
Eastern,  1891. 


Pitch,  national,  1887  or  earlier. 

Planes,  carpenters'. 

Pumps,  national,  1871. 

Rubber :  belting,  1875 ;  electric 
web  goring  (for  shoes),  na- 
tional, 1893;  gossamers,  1887; 
hose,  1875;  importers,  national, 
_1882 ;  manufacturers,  national, 
1882 ;  stamps  and  stencils,  na- 
tional, 1893. 

Sandpaper,  emery  and  emery 
cloth,  flint,  garnet,  ruby,  sand 
cloth,  national,  1887. 

Saws,  national,  1890. 

Scales. 

Screws :  machine,  1887 ;  wood, 
national,  international. 

Sewer  pipe,  1875. 

Sewing-machines,  1885. 

Sewing-machine  supplies,  New 
York  and  New  England,  1883. 

Spirits. 

Straw  braid. 

Straw-board,  1887. 

Tacks,  1875. 

Talc  mills,  New  York,  1893. 

Tar,  national,  1886. 

Teasel,  national,  1892. 

Textile  manufacturers,  Penn- 
sylvania, 1886  —  embracing 
dress  goods,  ginghams,  uphol- 
stery goods,  woollens,  yarns, 
chintzes,  worsted,  damasks. 

Tools,  edge,  American  Axe  and 
Edged  Tool  Company,  national, 
18iio. 

Turpentine,  Southern,  1892. 

Type  founders,  national,  1888. 

"Washers,  1884. 

"Watch-cases,  1886. 

"Well  tools,  for  oil,  gas,  and  arte- 
sian wells,  1889. 

Wood,  excelsior,  shavings  for 
packing,  national,  1889. 


APPENDIX   XV. 


331 


Wooden -ware,  1883  or  earlier. 
Wood-working  machines,  1891. 
Wool  felt. 
Wrenches,  1875. 

V.  —  TRAFFIC   AND    TRAVEL. 

The  Boad,  Horse,  and  Wagon. 

Bicycles,  United  States,  189:5. 
Board  of  Trade  formed  to  reg- 
ulate prices. 

Bicycle  tires. 

Bridge-builders,  188(!. 

Buggy  pails,  fibre  trust,  national, 
1888. 

Carriage  builders,  national,  1884. 

Carriage  hardware,  1884. 

Harness  dealers,  niauiifacturers, 
national,  188(). 

Liverymen's  Associations,  local, 
1881. 

Paving:  asphalt,  188H;  l)rick, 
Western,  1892;  pitch,  na- 
tional, 1887. 

Road-making  machines.  West- 
ern. 1890. 

Saddlery  Association,  national, 
1891.  " 

Saddle-trees,  Indiana,  Missouri, 
1892. 

Wagons,  local,  lS8(i. 

Wheels,  Western,  1889. 

Whips,  national,  1892. 

Shipping. 

Canal-boats,  1884. 

Cotton  duck,  sail-cloth,  national, 

1888. 
Ferries,  New  York  and  I5rook- 

lyn. 
I^ake  carriers,  Hidl  pool,  188(i. 
I>ake  Dock  Tri^st . 
Marine  insurance,  1883. 
Naval  stores. 


Ocean  steamers:  European,  Asi- 
atic, and  American ;  German 
steamship  companies,  ISW; 
North  Atlantic  Steamship  As- 
sociation. 

Pilotage,  New  York,  San  Fran- 
cisco. 

Steamboats."  in  the  Cincinnati 
and  New  Orleans  trade,  1884; 
forwarding  lines  along  the 
Hudson  River,  1891. 

Railroadii  and  Transportation, 
etc. 

Car-axles,  1890. 

Car-springs,  steel,  national,  1887. 

Cars,  freight  and  cattle. 

Elevators,  grain,  local.  Western, 
1887. 

Express  companies. 

Locomotives:  national,  1892; 
boiler  Hues,  1875;  tires,  na- 
tional, 1892. 

Railroad :  pools,  freight  and 
passenger,  sectional,  national; 
Eastern  Kailmad  A.ssociation, 
of  800  railroads,  to  tight  pat- 
ents. 

Steel  sleepers,  1885;  steel  rails, 
national. 

Street  railways,  local,  sectional. 

Telegraphs,  Western  I'nion,  1851. 

Telei)hones. 

VI.  —  Kl'ILDINC. 

.\sbestos,  for  i)aints,  rooting, 
st cam-pipe  and  boiler  cover- 
ings, 1S91. 

Beams  and  channels,  iron  aTid 
steel,  national,  1875. 

Blinds:  Northwestern,  1885;  na- 
tional, 1888. 

Brass,  gas,  plumbing,  steam, 
water  gooils,  1884. 


332 


INDUSTRIAL   COMBINATIONS. 


Brick:     local,    sectional,    1884 
Chicago,      New    York,     New 
Jersey,    Washington    (State) 
pressed  brick,  18iX). 

Cement :  Mississippi  valley,  1883 
Eastern,  1884;  Northwestern, 
1884. 

Cornice-makers,  national,  1884. 

Doors:  Northwestern,  1885;  na- 
tional, 1888. 

Fire  engines,  including  hook 
and  ladder  trucks,  hose-car- 
riages, heaters,  carts,  station- 
ary pumps,  and  other  supplies, 
1892. 

Fire  insurance. 

Glue,  national,  1894. 

Gypsum  stucco.  Eastern,  North- 
western, 1884. 

Hinges,  1875. 

Lime,  Western,  1883. 

lAimljer:  California  pine,  1883; 
California  redwood,  1883; 
Chicago;  Mississippi  valley; 
Northwestern,  1880;  Pacific 
coast,  1883;  poplar,  1889; 
Puget  Sound,  1883;  yellow 
pine.  Southern,  1890,  Eastern, 
1891 ;  dealers,  national,  1878. 

Nails:  Pennsylvania,  1.S75;  West- 
ern Association,  1882:  Atlan- 
tic States  Association,  1883. 

Paint. 

Plaster,  national,  1891. 

Roofing:  felt;  iron;  pitch,  Ver- 
mont, national,  1887. 

Sanitary  pottery. 

Sash,  doors,  and  blinds,  national. 

Sewer  pipes,  national,  1884. 

Stone:  brown  stone,  Lake  Supe- 
rior, 1890,  New  York,  18S4;  cut- 
stone,  quarry  owners.  Western, 
1892 ;  freestone ;  granite,  na- 
tional,   1891;    limestone,   rub- 


ble, aTid  flag,  Illinois,  1884; 
marble.  Western  dealers,  1885; 
Vermont  marble  quarries,  1889; 
sandstone.  New  York,  1883. 

Structural  steel. 

Stucco,  1883. 

Varnish  dealers,  national,  1888. 

Wall-paper:  national,  1879;  in- 
ternational, 1882. 

Vn.  —  FARM   AND    PLANTATION. 

Agricultural  implements,  manu- 
facturers, dealers,  1891. 

Binders,  Harvester  Trust,  1883. 

Churns,  1884. 

Corn-harvesters,  national,  1892 , 

Cotton  bagging,  1888. 

Cotton  presses,  local,  1892. 

Drain  tile,  Indiana,  1894. 

Fencing,  barbed  wire,  national, 
1881. 

Fertilizers:  1888;  guano;  men- 
haden oil,  New  England,  1885 ; 
phosphate,  South  Carolina, 
1887 ;  Florida,  1891. 

Forks,  national,  IS'.K). 

Harrow  manufacturers,  national, 
1890. 

Harvesting-machines,  national, 
1883. 

Hay-presses,  national,  1889. 

Hay  tools.  Western  and  North- 
western, 1884. 

Hoes,  national,  1S<X). 

Horse-brushes,  prison-made,  1889. 

Jute  grain  bags,  national,  1888. 

Mowers,  national,  1883. 

Pails,  fibre  trust,  national,  1888. 

Paris  green. 

Ploughs,  Northwestern,  1884. 

Rakes,  national,  18!)0. 

Reapers,  1883. 

Scythe-makers,  luitioual,  1884. 

Shovels,  national,  1890. 


APFENDIX  XV. 


333 


Snath  manufacturers,  national, 

1891. 
Tlireshiuui-iiiacLiiues,      national, 

LSliO,  IS'.il. 
Twine,  binding,  1887. 
Vehicles. 

VIII.  —  SCHOOL,     LIBRARY,     AND 
CUUNTIXG-ROO.M. 

Blank-books,  1888. 

Euvelope-s,  1888. 

Lead-pencils,  1878. 

Lithographic  printers,  national, 
18S«. 

Novels  (paper-covered  "  libra- 
ries"), 18;  K). 

School-books,  national,  1884. 

School-furniture,  national,  1892. 

Slates  and  slate-pencils,  national, 
1887. 

Subscription-books,  local,  sec- 
tional, 18<)2. 

Type-founders,  national,  1888. 

Type-writers. 

Writing-paper,  national,  1884. 

IX.  —  SHOOTING   MATERIALS. 

Ammunition,  1883. 
Arms,  188:}. 

Cartridges,  national,  1883. 
Dynamite. 

Fireworks,  national,  1S90. 
Gunpowder,  national,  187'). 
Guns,  1883. 

Shot-tower  companies,  national, 
1873. 

X.  —  FOR  THK    PERSON. 

Barbers'  National  Tonsorial  Par- 
lour (Company,  organized  to 
(■slal)lisli  barber-sliops  in  all 
tlic  large  cilies  of  the  United 
Stales.  ISiK). 

Buttons. 


Clothes-brushes,  prison-made, 
1889. 

Coat  and  cloak  manufacturers: 
New  York,  1883  ;  Chicago,  1893. 

Collars  and  cuflfs.  New  York, 
1890. 

Cotton:  Fall  Kiver;  Southern 
mills.  1881 ;  tliread  (spool-cot- 
ton), 1888. 

Dress-goods,  Pennsylvania,  1880. 

Furs. 

Ginghams,  Pennsylvania,  1886. 

Gloves,  New  York. 

Hats:  fur,  1885;  woollen,  na- 
tional. 

Knit  goods :  New  York,  1884 ; 
Western,  1889. 

Jewellers,  national. 

Laundries:  Chicago;  Chinese 
Laundry  Union,  New  York 
City,  1889;  St.  Louis,  1893. 

Pocket-knives,  national,  1892. 

Ribbons,  national,  1892. 

Rul)ber  boots  and  shoes,  national, 
1882. 

Seal-skin,  national,  1892. 

Shirts :  Troy,  New  York  City, 
1890. 

Shoe:  manufacturers,  national, 
1887:  retailers.  New  England, 
188.'),  national,  1880. 

Silk:  manufacturers,  interna- 
tional, 1888;  sewing,  national, 
1887:  ribbon,  1884. 

Trunks,  national,  1892. 

Umbrellas,  Eastern,  1891. 

Watcli:  manufacturers,  makers 
and  jewellers,  national.  lS8(i; 
National  .\ssociatioii  of  .lob- 
bers  of  American  Watches  and 
Cases,  lS8(i. 

Woollens:  manufacturers,  18H2 ; 
worsteds,  yarns,  Pennsylva- 
nia, 1880. 


334 


INDUSTEIAL  COMBINATIONS. 


XI.  —  SPIRITS    AND    TOBACCO, 
ETC. 

Beer,  United  States  Brewers' 
Association,  1861,  local  in 
most  of  the  larger  cities; 
great  combination  of  brew- 
eries bought  up  by  English 
capitalists ;  St.  Louis,  Chicago, 
etc.,  1889-91. 

Champagne,  New  York  City, 
1889;  France,  1891. 

Meerschaum  pipes.  New  Jersey, 
1892. 

Soda  fountains,  1890. 

Spittoons,  fibre  trust,  national, 
1888. 

Tobacco  and  cigars,  local,  sec- 
tional, national,  1882;  cigar- 
ettes, 1890. 

Waters,  mineral,  national,  1889. 

Whiskey  and  "  domestic  "  —  or 
artificial  —  brandy,  rum,  gin, 
and  cordials  made  in  imitation 
of  the  genuine. 

Wine-growers,  California,  1889. 

Wine  and  liquor  dealers'  associ- 
ations, local. 

XII. — DOMESTIC    SUPPLIES. 

/;*  General. 

Candles,  coal,  furnaces,  gas,  oil, 
matches,  ranges,  stoves,  etc. 
(see  Light,  Heat  and  Power) . 

Carpets:  Eastern,  1885. 

Chairs:  cane,  1889;  manufac- 
turers, Western,  1880;  seats, 
perforated,  national,  1888. 

Furniture:  national,  188.S ;  Chi- 
cago manufacturers,  1886;  re- 
tailers, New  England,  1888; 
national.  1893. 

Hair-cloth,  Rhode  Island,  1893. 

Oil-cloth,  table  and  stair.  Oil- 
cloth Association,  1887. 


Pails,  fibre  trust,  national,  1888. 
Soap,  national,  1890. 
Upholsterers'  felt. 
Upholstery  goods,  textile  manu- 
facturers, Pennsylvania,  1886. 
Window-shades,  1888. 

The  Kitchen. 
Boilers. 
Bottles. 
Brooms,  1886. 
Brushes,  scrubbing,  prison-made, 

1889. 
Chopping-bowls,     wooden-ware, 

national,  1884. 
Crockery,  national,  1883. 
Fruit-jars,  1891. 
Glass-ware,  1883. 
Hollow-ware,  prison-made,  1888. 
Keelers,    fibre    trust,    national, 

1888. 
Kettles,  prison-made,  1888. 
Lamp-chimneys,  1883. 
Measures,  fibre  trust,  national, 

1888. 
Pans    and    pots,     prison-made, 

1888. 
Potato-mashers,      wooden-ware, 

national,  1884. 
Pottery,  yellow-ware,  national, 

1889. 
Sinks,  copper. 

Stamped-ware,  national,  1882. 
Tin-ware:  national,  1883. 
Water-coolers,      filters,       pails, 

fibre  trust,  national,  1888. 
Water-pails,    wooden-ware,   na- 
tional, 1884. 
Wooden-ware,  national,  1884. 

Laundnj. 
Borax. 

Clothes-pins,  New  York,  1888. 
Clothes-wringers. 


APPENDIX  XV. 


335 


Soap,  national,  1890. 

Soda,  1884. 

Starch:  Western,  1882;  national, 
18<)0. 

Washboards,  New  York,  1888. 

Wash-tubs,  wooden-ware,  na- 
tional, 18S4. 

Washinj^-machines,  national, 
18'.)1. 

Water-tubs,  fil^re  trust,  national, 
1888. 

Zinc,  sheet,  18i)0. 

Dining-room. 
Butter-dishes,  1886. 
Glass  tal)le-ware,  1889. 
Plated-ware. 
Silver-plated  ware. 
Silver-ware,  national,  1802. 
Table  cutlery,  national,  1881. 
Table  oil-cloth,  natiiiiial,  1888. 
Tables,      extension-tables,      na- 
tional, 1893. 

Parlour. 

For  carpets,  furniture,  uphol- 
stery, etc.,  see  under  "In 
General,"  above. 

Mantel  lambrequin,  wool  felt, 
1888. 

Music,  books  and  instruments, 
Boston,  New  York,  Chicago, 
Cincinnati,  18'.)li. 

Organs,  local,  sectional,  1.S89. 

Parlour  franie  manufacturers. 

Parlour  furniture.  Western  Asso- 
ciation, l.S.H(). 

Pianos,  local,  .sectional,  1889; 
national,  189:^. 

Piano-covers,  wool  felt,  188H. 

Picture-frames,  IS'.K). 

Kugs,  Eastern,  188.">. 

Table-covers.  wt)ol  felt,  1.S88. 

Tapestries,  Ea.stern,  1885. 


Bath-room. 
Bath-tubs  (see  Copper). 
Sanitary-ware,  1889. 
Sponges,    Florida,    New    York, 

1892. 

Bedroom. 
Chintzes,  Pennsylvania,  1886. 
Looking-glass :    international, 

1890. 
Spring  beds,  national,  1890. 
Wire    mattress:    Northwestern, 

1886;   national,  1890. 

Xril.  —  FOOD. 

Bread,  biscuit,  crackers,  local, 
sectional,  national. 

Butter,  local,  1889. 

Candy,  local,  national,  1884. 

Canned  gootls:  Western,  1885; 
national,  188'.t:  California 
canned  fruit,  1891. 

Cider  and  vinegar,  national,  1882. 

Coffee,  Arbuckle  trust,  1888. 

Corn-meal,  Western,  18n4. 

Cotton-seed  oil. 

Dairy  Association,  national,  1893. 

Eggs,  local. 

Fish :  England,  1749  and  before  : 
New  York  and  New  England, 
1892;  salmon,  Alaska,  18', U ; 
salmon  cainiers  of  the  Pacific 
coast,  18915;  sardines.  East- 
ern, 188.".;  international,  18!H>. 

Flour:  United  States.  National 
-Millers'  .\ssociation,  188.t:  win- 
ter wheat  mills,  natiouiil,  1888; 
S])ring  wheat  mills,  188!l:  rye 
tlour,  local,  18<ll ;  llour-millsof 
I'tali  and  Colorad...  18'.I2. 

Food  Manufacturers'  Associa- 
tion, riiitc<i  States,   18<il. 

Fruit:  li:inanas.  Southern,  1888; 
California  fruit-growers,  18'.»2; 


336 


INDUSTRIAL  COMBINATIONS. 


cranberries,  Cape  Cod,  1888; 
Florida,  1889;  foreign  fruit, 
New  York,  1884;  Fruit-trade 
Association,  New  York,  1882; 
fruit-growers  of  the  Eastern 
and  Middle  States  against 
commission-merchants,  1887 ; 
preserves  and  jellies,  West- 
ern, 1883;  American  Preserv- 
ers' Company,  1889;  prunes, 
California ;  strawberry-grow- 
ers, Wisconsin,  18112;  water- 
melons, Indiana,  South  Caro- 
lina, 1889. 

Grape-growers,  Northern  Ohio, 
1894. 

Grocers:  wholesale,  retail;  local, 
sectional,  national. 

Honey,  local,  1888. 

Ice:  local,  sectional,  1883;  arti- 
ficial, Southern,  1889. 

Lard-refiners,  Eastern,  1887. 

Meat  and  cattle :  beef,  mutton, 
pork ;  Butchers'  National  Pro- 
tective Association ;  Chicago 
packers;  Inter-mountain  Stock- 
growers'  Association,  Utah, 
1893  ;  International  Cattle 
Range  Association;  Live-stock 
Association,  1887;  Northwest 
Texas  Live-stock  Association, 
1878 ;  Western  Kansas  Stock- 
growers'  Association,  1883  ; 
Wyoming  Stock-growers'  As- 
sociation, 1874. 

Milk:  local,  sectional,  1883;  con- 
densed milk.  New  York,  Illi- 
nois, 1891. 

Oatmeal,  1885. 

Olive-oil. 

Oysters,  local,  1890. 

Pea-nuts,  1888. 

Pickles,  national,  1891. 


Produce:  Produce  Commission- 
merchants,  eight  large  cities  — 
North,  South,  East,  West,  1883 ; 
West,  1888. 

Raisins,  California,  1894. 

Rice-mills,  Southern,  1888. 

Salt:  rock;  English  Salt  Union, 
1888;  international,  1889;  Can- 
ada, 1891. 

Sugar,  1887.  Glucose,  national, 
1883;  international,  1891. 

Wine,  California,  1894. 

XIV.  —  MEDICAL,  SURGICAL,  ETC. 

Artificial  teeth,  1889. 

Castor-oil,  1885. 

Cocoa-nut  oil,  American  import- 
ers, 1881. 

Coffins,  National  Burial-case  As- 
sociation, 1884. 

Dental  machines  and  supplies, 
United  States,  1889. 

Drugs :  importers  ;  druggists,  re- 
tail, sectional,  national,  1883; 
wholesale,  sectional,  national, 
1884;  Canada,  1874;  manufac- 
turers, national,  1884. 

Ergot,  1891. 

Glycerine,  New  York,  1888. 

Life  insurance,  1883,  national, 
1891. 

Patent  medicines,  national,  1884. 

Peppermint,  local,  1887. 

Quinine,  1882. 

Tombstones,  local,  Brooklyn, 
Chicago,  1891. 

Vaseline. 

XV.  —  MISCELLANEOUS. 

Athletic  clubs,  1893,  to  reduce 
charges  made  by  prize-fighters 
for  exhibition. 

Base-ball,  national,  1876. 


APPENDIX   XV. 


337 


Billiard-tables  and  furniture, 
1884. 

Bill-posters,  United  States,  Can- 
ada, 1872. 

Dime  museums,  national,  1883. 

News-dealers,  1884;  newspa- 
pers, Associated  Press,  United 
Press;   sectional,  national. 

Photographers,  uatioual,  18Sy. 

Playing-cards. 

Printers,  show  and  job,  18i)3. 


Racing  trust,  jockey  club,  1S!»4. 

Retailers,  1891.  Small  retail 
store-keepers  of  Kansas  City 
protest  against  mammoth  de- 
partment stores. 

Safes,  national,  1S92. 

Theatrical  trust.  Interstate 
Amusement  Company,  Spring- 
field, 111.,  18'.)4. 

Warehouses:  Brooklyn,  1887; 
national,  1891. 


338  mDUSTRIAL  COMBINATIONS. 


APPENDIX   XVI. 

BIBLIOGRAPHY. 


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tion ;  Conditional  Statutory  Provisions  affecting  Com- 
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Railw.  and  Corp.  L.  J.  1889,  pp.  97-100. 
Authorities  on  Combinations,  New  York,  1889. 
Defence  of  Trusts,  N.  Y.  Tribune,  Feb.  2,  1890. 
"  Trusts  "  ;  pamphlet  from  the  Tribune,  New  York,  1892 

(vide  Powdeiiy). 
Aggi-egated  Capital  (Syracuse  University  Lectures),  New 
York,  1893. 


APPENDIX   XVI.  341 

The  Present  Legal  Status  of  Trusts,  7  Ilarv.  Law  Rev. 
November,  1893. 

Donald,  Rob.  —  Trusts  in  the  United  States,  Contemp.  Rev. 
June,  1890,  p.  829. 

Down,  J.  —  Trusts,  Abuses  and  Remedies,  5  Annals  of  the 
Am.  Ac.  of  Pol.  and  Soc.  Sci.,  pp.  114-118. 

DwiGHT,  Theo.  W.  —  The  Legality  of  Trusts,  :}  Pol.  Sci. 
Quar.  1888,  pp.  592-632;  28  Cent.  L.  J.  1889,  p. 
29  ff. 

Ely,  Richard  T.  —  Nature  and   Significance  of   Corpora- 
tions, Harper's  Mag.  May,  1887. 
Growtii  of  Corporations,  lb.  June,  1887. 
Future  of  Corporations,  lb.  July,  1887. 
Problems  of  To-day  ;  a  discussion  of  Protective  Tariffs, 

Taxation,  and  INIonopolies,  New  York,  1888. 
The  Tariff  and  Trusts  (from  Shane  :  The  National  Reve- 
nues), Ciiicago,  1888. 
The   Telegraph    Monopoly,   149    No.    Amer.  Rev.    1889, 
pp.  44-53. 

Farrer,  T.  II.  —  Industrial  iNlonopolies,  Quar.  Rev.  Oc- 
tober, 1870. 

Flagler,  John  II.  —  Address  before  the  Conunercial  Club 
of  Providence,  Rev.  Jour.  Dec.  lotli,  1888. 

GiDDiNGS,  F.  II.  —  Persistence  of  Competition,  2  Pol.  Sc. 
Quar.  1887,  pp.  03-78. 

GoDKiN,  E.  L.  —  Corporations  and  ^lonopolies,  18  Nation, 
1874,  pp.  359-360. 

Godson,  Richard.  — Monopolies  and  Combination  Law  of 
Patents,  1st  ed.,  p.  42. 

(iiiEKNiiooD,  Ellsiia. —  Doctriue  of  Public  Policy,  l^Sd, 
pp.  624-683. 

GuNTON,  Geo.  —  Economic  and  Social  Aspect  of  Trusts,  3 
Pol.  Sc.  Quar.  1888,  pp.  38.-)-408. 
Principles  of  Social  Economics,  11.  and  III.,  .New  York, 
1891. 


342  INDUSTRIAL   COMBINATIONS. 

The  Economic  Errors  of  Trusts,  4  Soc.  Economist,  Feb- 

ruar}',  1893. 
Gunton's  Apology  of  Trusts,  Nation,  February  7, 1889. 
Hadley,  a.  T.  —  Monopolies   and   Combination,    1    Quar. 
Jour,  of  Econ.,  p.  28. 
Public  Business  Management,  3  Pol.  Sc.  Quar.  1888,  pp. 

582-591. 
Regulation  of  Monopolies,  Railway  Gar.  1890 ;  7  Railw. 

and  Corp.  L.  J.  1890,  pp.  59-60. 
Railway  Transportation,  New  York,  1892. 
Halle,  Erxst  vox. —  Unternehmer-  und  Unternehmungs- 
verbande  in  den  vereinigten  Staaten  von  Nordamerica, 
Schriften  des  Vereins  fiir  Socialpolitik,  Vol.  LIX  2. 
pp.  93-327,  Leipzig,  1894. 
Hawes,  C.  p.  —  Argument  in  the  Matter  of  Proposed  Leg- 
islation  relative   to   Trusts;    pamphlet.    New   York, 

1888,  p.  32. 

Heinsheimer,  N.  —  The  Legal  Status  of  Trusts,  2  Colum- 
bia L.  Times,  1888,  S.  51-58  ;  4  Pol.  Sci.  Quar.  1889, 
pp.  190-193. 

Hess,  J.  S.  —  Monopolies  and  Combination,  30  Ref .  Quar. 
Rev.,  p.  450. 

Hold,  Byron  W.  —  Trusts  v.  AYages,  5  Tariff  Reform,  No. 
•    17,  New  York,  1872. 

Hudson,  J.  F.  —  ^lodern  Feudalism,  144  No.  Amer.  Rev. 
1887,  pp.  177-290. 
Monopolies  and  Combination,  144  No.  Amer.  Rev.,  p.  277. 

Iles,  Geo.  —  Competition  on  the  Trusts,  34  Pop.  Sci.  Month. 

1889,  pp.  619-630. 

Jeans,  I.  St.  —  Trusts,  Pools,  and  Combinations,  Social  Sci- 
ence Series,  London,  1894. 

Jenks,  J.  W.  —  Development  of  the  Whiskey  Trust,  4  Pol. 
Sc.  Quar.  1889,  pp.  296-319. 
Trusts  in  the  United  States,  Economic  Journal,  London, 
1892. 


APPENDIX   XVI.  343 

The  same  in  German.  —  Die  Trusts  in  den  Ver.  Staaten 

von  Nordamerika.     In  Conrads  Jahrbiichern.    N.  F. 

Bd.  I,  Jena,  1891. 
Capitalistic   Monopolies,  9   Pol.    Sci.   Quar.  September, 
1894,  p.  486  ff. 
Kaiin,  Laz.  —  The  Stove  Industrj"  and  the  Ethics  of  Con- 
solidation, Cleveland,  1893. 
Lloyd,  II.  D.  —  Lords  of   Industry,  138  No.  Amer.   Rev. 

1884,  pp.  535-553. 
Stoi'y  of  a  Great  Monopoly ;  The  Standard  Oil  Co.,  47 

Atlantic  Mo.  1881,  pp.  317-334. 
Wealth  against  Commonwealth,  Chicago,  1874. 
Summary   of    Facts   before   tlie    Antimonopoly  Conven- 
tion, Chicago,  1893. 
Lewis,  John.  —  The  American  Railroad  and  Corporation 

Reports,  Vol.  I  ft.,  Chicago,  1890. 
McCooK,    John   J.  —  Proposed    Railway    Trust,    5   Railw. 

and  Corp.  L.  J.  1891,  pp.  165  ff. 
McPherson,   L.   S.  —  Tiie    Meaning   of    Corporations   and 

Trusts,  Pop.  Sci.  Month.,  July,  1894. 
Mickey,  D.  M.  — "Trusts,"  22  Amer.  Law  Rev.  1888;  pp. 

538-549  ;  20  Week.  Law  Bull.  1888,  pp.  159-165. 
MiNTURN,  Jas.  F.  —  History  of  Trusts,  3  Belford's  ]\Iag. 

1889,  pp.  61-66. 
Morgan,  A.  —  Coml)inatioii  ;    is  it  a  Crime?  33  Pop.  Sci. 

Month.  1888,.  pp.  42-66. 
Parsons,  John  E.  —  Argument  in  Case  of  People  v.  Nortli 

River  Sugar  Ref.  Co.,  New  York,  1889,  p.  18. 
Passos,  Dos.  —  The  Interstate  Commerce  Act,  New  York, 

1887. 
Peck,  Jas.  F.  —  Conspiracy   Prosecutions  and  Conspiracy 

Laws  of  New  Xetherland,  New  York,  etc.,  9  N.  Y. 

Assembly  Doc.  1888,  No.  68,  pp.  563-700. 
Powderly,    Terence    W. — "Trusts";    pamphlet    from 

the  Tribune,  New  York,  1892  (ride  S.  C.  T.  Dcidd). 


344  INDUSTRIAL   COMBINATIONS. 

Pryok,  Roger  A.  —  Substance  and  Argument  before  the 

Legislative   Committee  of  the  State  of   New  York, 

New  York,  1888. 
Brief ;  Case  of  the  People  v.  North  River  Sugar  Refining 

Co.,  Supreme  Court,  Circuit ;  pamphlet.  New  York, 

1888. 
Trust  Combinations  ;  Illegality  of  Trust  Monopolies. 
Reply ;  pamphlet.  New  York,  1888,  p.  9. 
Additional  Brief  for  Plaintiff,  New  York,  1889. 
Illegality  of  Trust  Combinations  ;  A  Cause  of  Corporate 

Forfeiture ;  Argument  in  Case ;  People  v.  North  River 

Sugar  Refining  Co.,  New  York,  1889. 
Rapsher,  W.  M.  —  Dangerous  Trusts,  146  No.  Amer.  Rev. 

1888,  pp.  .509-514. 
Rich,  G.   E.  —  Trusts ;    their   own   Correctives,    Pop.    Sci. 

Month.  April,  1894,  pp.  740  ff. 
Root,  Frank  D.  —  Trusts  and  the  Tariff,  1  Tariff  Reform, 

No.  30,  New  York,  1888. 
Ross,  Geo.  W.— Trusts,  10  Chic.  Law  Jour.  1889,  pp.  112- 

144. 
Seeger,  Ferd.  —  Jobs  in  Cities,  New  York,  18.86. 
Semmes,  Thomas  J.  —  Argument  on  Behalf  of  the  Cotton 

Oil  Trust,  New  Orleans,  1888. 
Spelling.  —  Treatise  on   Trusts  and   ^Monopolies,   Boston, 

1893. 
Sterne,    Siji.  —  ^Monopolies    and    Combination,    2    Public 

Cyclo.  of  Pol.  Sci.,  p.  890. 
Stickney,  a.  B.  — The  Railway  Problem,  St.  Paul,  1891. 
Stimson,  Geo.  W.  —  Trusts,  7  Harv.  Law  Rev.  1887,  pp. 

132-143. 
Sullivan,  A.  S.  —  Address  at  the  Laying  of   the  Corner 

Stone  of  the  New  Building  of  the  Consolidated  Stock 

Exchange   in   New  York  Citj',  Sept.  8,  1887;   Stock 

Exch.  Annual  Rep.  1888,  pp.  120-123. 


APPENDIX   XVI.  345 

Summer,  Wm.  G.  —  Good   Sense   on   the   Trust  Question, 

N.  Y.  Independent,  1888. 
SwANN,  JoHX.  —  Combinations   and   Pools ;    Hints   to    In- 
vestors, 1886. 
Swift,  M.  J.  —  What  sliall  be  done  with  Trusts?  Andover 

Rev.  1888,  pp.  109-127. 
TiioMi'SOX,  RoBT.  Allis.  —  Concerning  Trusts ;  Paper  read 

before  the  Philadelphia  Science  Association,  Feb.  21st, 

1889. 
TnuKBKR,    F.    B.  —  ConiV)ination    and    Competition,    New 

York,    1888,    5    Railw.    and    Corp.    L.    J.    1889,    pp. 

20-2i. 
UiiLE,  J.  B.  —  Anier.  L.  Reg.,  N.  S.  Legal  Misc.  Sept.  No. 

188S,  p]).  v.,  vi. 
W'ai.kkk.  —  Competition  not  tlie  Life  of  Trade  (Address). 
W'aknkk,  .JoiiN    DE   Witt.  —  Labor,   Wages,  and    Tariffs, 

2  Tariff  Reform  No.  :51,  New  York,  Jan.  15,  1892. 
Tariff  Trusts   plead    Guilty,  5  Tariff   Reform  Vi,  New 

York,  Sept.  15,  1892. 
Tariffs,  Tramps,  and  Trusts,  5  Tariff  Reform  53,  New 

York,  1891. 
Tariff,  Trusts,   100  Samples,   5  Tariff   Reform    8,  New 

York,  1892. 
Sugar,  Sugar  Tariff,   Sugar  Trust,  7    Tariff   Reform  2, 

New  York,  1895. 
The  Sugar  Trust,  7  Tariff  Reform  4,  New  York,  1891. 
Welch,  J.  C  — Trusts,  13G,  No.  Amer.  Rev.  1883,  pp.  191- 

200. 
Wki.i.s.  —  Recent  Economic  Changes,  New  York.  1889. 

Trusts    and    Mono[)olies ;    How    tlie    Republican    Party 

greets  ami  maintains  them  ;  Speech,  October.  ISS!). 
Wii.ErT,  K.  —  Trusts,  'I'lie  New  .Juggernaut,  7  Diake's  Mag. 

1889. 
Wi.MAN,   Fkastts,  —  How   Fortunes   are    nnnle  :    ('ond>ina- 

tions  as  a  Fortune  (letter,  N.  V.  Tribune,  Dec.  5,  1889. 


346  INDUSTRIAL   COMBINATIONS. 

The  Waste  of  Competition ;  pamphlet,  New  York,  1889, 

p.  8. 
Winters.  —  Bibliography  of  Trusts,   Railway   and   Corp. 

L.  J.,  1891. 
Wood,  Henry.  —  Bugbear  of  Trusts,  5  Forum,  1888,  pp. 

581-590. 
Wrights,  R.  S.  —  Law   of   Criminal   Conspiracies,   Amer. 

Ed.  Philadelphia,  1887. 
Trusts  and  the  Tariff,  Supplement  of  the  N".  Y.  World,  -luly, 

1892. 
Lead  Trust  Secrets,  New  York  Herald,  Feb.  6,  1890. 
Power  of  Trusts,  Public  Opinion,  March  1,  1890. 
The  So-Called  "  Trust,"  21  Amer.  Law  Rev.  1887,  pp.  976- 

979. 
Modern  Competition,  62  Fraser  Mag.  p.  767. 
Criminal  Conspiracies  and  Combinations,   10  Washington 

Law  Rep.  1882,  pp.  353,  369,  101,  133,  449,  481,  497; 

16  Cent.  L.  J.  1883,  p.  39. 
Monopoly  in  Business,  40  Mo.  Rel.  Mag.  202. 
Municipal  Ordinances  creating  a  INlonopoly,  34  Amer.  Dec. 

1882,  pp.  637,  638. 
Remedies   for   the  Evils  of   Monopolies,   8  West.  Journal, 

1874,  pp.  511-519. 
A  Tyrant  Trust,  New  York  Evening  World,  June  28,  1889. 
After   the  Trust ;  Views  of   S.  C.   T.  Dodd,  John   R.  Dos 

Passos,  John  E.  Parsons,  etc.,  New  York  Mail   and 

Express,  Feb.  1,  1890. 
American  Cotton  Oil  Trust ;  How  a  Million  was  Lost,  New 

York  Evening  Post,  Sept.  2,  1889. 
American  Cotton  Oil  Trust  Secrets,  New  York  Times,  Feb. 

15,  1890. 
A  Book  Trust,  New  York  Mail  and  Express,  Feb.  7,  1890 ; 

New  York  World,  March  7,  1890. 
Chicago  Gas  Trust,  New  York  Daily  Times,  Jan.  4,  1888 ; 

5  Railw.  and  Corp.  L.  J.  1889,  p.  536. 


APPENDIX   XVI.  347 

Coffin-Makers'  and  Undertakers'  Trust,  Industrial  Journal, 

February,  1889. 
Frenzy  for  Trusts,  Xew  York  Evening  Sun,  June  27,  1889. 
Effect  of   Trust  CoMil)inatioiis,  Xew  York  Com.  Bulletin, 

April  1,  1889. 
Farmers'  Trust  of  the  Northwest,  Xew  York  Com.  Adver- 
tiser, :\Iarch  2G,  1888. 
Ferry  Syndicate  of  Xew  Y''ork  City,  Xew  York  Star,  Feb. 

20,  1890. 
Difference  in  Trusts,  5  Railw.  and  Corp.  L.  J.  1889,  pp.  455- 

456  ;  Anier.  Grocer,  ]\Iarcli  27,  1889. 
Economic  Effects  of  Combination,  Age  of  Steel,  5  January, 

1889. 
Industrial  Trusts,  18  Amer.  Piiil.  1889,  p.  246. 
Morality  of    Trusts,   66   Saturday   Review,   London,  1888, 

S.  609. 
Railway  Trusts,  5  Railw.  and  Corp.  L.  J.  1889,  p.  165  ;  6  Bd. 

1889,  pp.  61,  191,  201. 
History  of  the  "  Gentlemen's  Agreement,"  Xew  Y'ork  Star, 

Jan.  12,  1890. 
Brief  History  of  the  Standard  Oil  Co.;  Its  INIethods  and 

Influence  ;  pamphlet,  Xew  York,  1887,  pp.  2:3  ff. 
Trusts,  and  how  to  deal  with  them.  Chautauquan.  February, 

1890. 
Trusts  in  America,  61  London  Spect.  1888,  p.  1253. 
The  Sugar  Trust,  X.  Y.  World,  April  19,  1894  ;  A  History  of 

the  Sugar  Trust,  Harper's  Weekly,  Aug.  18,  1894. 
The  Spirit  of   ^lonopoly,  3   Amer.    ]..    J..  X.   .S.  1S5(».  jij). 

28:}-286. 
Points  for  Petitioners  iit  re  Grant  et  al.  on  a  hearing  before 

Hon.  Chas.  F.  Tabor,  Attorney  General  X.  Y.  1888. 
Petitions  and  Answers,  with  Opinion  of  the  Attorney  Gen- 
eral, Hon.  Chas.  F.  Tabor,  in  the  Matter  of  Grant 

et  al.  U.  S.  House  of  Rep.,  Doc.  No.  3112,  1888,  pp. 

200-209. 


348  INDUSTRIAL   COMBINATIONS. 

Judge  Barrett  and  the  Xewspapers,  5  Railw.  and  Corp.  L.  J. 
1889,  pp.  5:3-54  (case  of  the  People  v.  North  River  Sugar 
Refining),  Supreme  Court,  General  Term  Appellants. 

Case  in  Appeal  from  -ludgment,  New  York,  1889,  pp.  Ill  ff. 

Opinion  of  Hon.  Chas.  Daniels,  7  New  York  Supp.  1889, 
p.  406;  27  New  York  State  Rep.,  p.  282;  5  Lawy. 
Rep.  Ann.  386  ;  2  New  York. 

Report  of  Speeches  at  the  Banquet  of  the  Merchants'  Asso- 
ciation, Boston,  Jan.  8,  1889  ;  Boston  Journal,  Jan. 
9,  1889  ;  Boston,  1889. 

Report  of  the  Addresses  to  the  Plymouth  League ;  subject, 
"  Trusts,"  Brooklyn  Eagle,  Feb.  7,  1889. 

Report  No.  3112,  U.  S.  House  of  Representatives,  50th 
Congress,  1st  Session,  July  30,  1888.  From  the  Com- 
mittee on  Manufactures  in  Relation  to  Trusts ;  pam- 
phlet, Washington,  D.  C,  1888  ;  Part  I.,  Sugar  Trust, 
p.  211  ;  Part  II.,  Standard  Oil  Trust,  p.  956. 

Report  No.  4165,  Part  I.,  U.  S.  House  of  Representatives, 
50th  Congress,  2d  Session,  March  2,  1889.  From  the 
Committee  on  Manufactures  in  Relation  to  the  Whis- 
key Trust  and  the  Cotton-bagging  Combination ; 
pamphlet,  Washington,  D.  C,  1889,  p.  188. 

Report  No.  4165,  Part  II.,  U.  S.  House  of  Representatives, 
50th  Congress,  2d  Session,  March  2,  1889 ;  Views  of 
the  Minority  of  the  Committee  on  Manufactures  on 
the  Investigation  of  the  Sugar  and  Standard  Oil 
Trusts;   pamphlet,   Washington,  D.  C,  1889,  p.  37. 

Report  of  Committee  on  General  Laws  on  the  Investigation 
relative  to  Trusts,  March  6,  1888  ;  New  York  Senate 
Doc.  No.  50;  pamphlet,  Albany,  1888,  p.  692. 

Report  of  Committee  on  General  Laws  relative  to  Combi- 
nations commonly  known  as  Trusts,  May  9,  1889  ; 
Majority  and  Minority  Reports,  etc..  New  York  Sen- 
ate, Doc.  No.  64  ;  pamphlet,  Albany,  1889,  p.  307  ;  5 
Railw.  and  Corp.  L.  J.  1889,  pp.  478-479. 


APPENDIX    XVI.  349 

Report  of  the  Select  Committee  to  the  Canadian  House  of 
Commons  upon  Alleged  Combinations  in  Manufac- 
tures, Trade,  and  Insurance  in  Canada,  May  16,  1888, 
Sixth  Parliament,  2d  Session ;  pamphlet,  Ottawa, 
1888,  p.  750. 

Report  of  Proceedings  of  the  Special  Conniiittee  on  Rail- 
roads of  the  New  York  Assembly  to  investigate  Al- 
leged Railway  Abuses,  A.  B.  Hepburn,  Chairman, 
5  vols.  8vo,  New  York,  1879. 

Report  of  the  Special  Committee  ;  Investigation  of  Alleged 
Railway  Abuses,  Vol.  3,  New  York  Assembly  Doc. 
1880,  No.  38,  p.  78. 

Report  and  Testimony ;  Special  Senate  Committee  of  the 
State  of  New  York  appointed  to  investigate  the  Cor- 
nering of  Grain,  Combinations,  Pools,  etc.,  Vol.  5, 
New  York  Senate  Doc.  1883,  No.  4.5,  p.  934. 

Report  of  the  Interstate  Commerce  Commission,  1888-1893. 

Report  No.  2600,  House  of  Representatives,  Whiskey  Trust 
Investigation,  March  1,  1893. 

Report  No.  2278,  House  of  Representatives,  Alleged  Coal 
Combination,  .lanuary,  1893,  and  Testimony  taken  by 
the  Sub-Committee  of  the  Connnittee  of  Interstate  and 
Foreign  Commerce,  etc.,  Washington,  18!)2,  in  regard 
to  the  Alleged  Combinations  of  tlie  PhiladeljOiia  and 
Reading  Railroad  Co.  ami  oilier  Railroad  and  Coal 
Commissions  and  ri'oduccis  of  Coal,  AVasliinglon, 
D.  C,  1892. 

Keport  No.  829,  May  1,  b^iM).  and  Testimony  taken  by  the 
Select  Committee  of  tlir  I'.  S.  Senate  on  (he  Trans- 
portation and  Sale  of  Milk  I'ldduets,  ^^'ashington, 
1889  and  18!HI. 

Report  of  the  Special  Conimittee  of  tlie  Oliio   .\ss(Mnbly  on 

Trusts,  Pools,  etc.,  18.S!I. 
Keporton  the  Constitutionality  and  l-e^al  Status  of  'I'rusts 
in    the    V.   S.    Foreign   Ollice,   1^9(1,   Misc.  Series  No. 


350  INDUSTRIAL   COIVIBINATIONS. 

174 ;  Reports  on  Subjects  on  General  and  Commer- 
cial Interests  j^resented  to  the  Houses  of  Parliament 
by  Command  of  Her  Majesty,  London,  July,  1890. 

Repoi't  of  Commission  appointed  to  investigate  the  Waste 
of  Coal  Mining,  etc.,  Philadelphia,  1893. 

Sugar  Trust  Injunction,  23  Abb.  N.  C.  (1889,  p.  314 ;  2  Xew 
York  L.  J.  1890,  p.  2155.) 

American  Cotton  Oil  Trust  Co.  Case,  La.,  1  Railw.  and  Corp. 
L.  J.  1887,  p.  509  ;  40  La.  Ann.  1888,  p.  8. 

Enloe's  Proposed  Amendment  to  the  Constitution,  H.  R. 
Review,  No.  30,  1890. 

Statutory  Enactments  against  Trusts,  28  Cent.  L.  J.  1889, 
pp.  533-534. 

U.  S.  Senate  Bills,  Session  of  1889-1890,  No.  1  (Sherman, 
Ohio),  6  (George,  Miss.),  62  (Reagan,  Tex.). 
Turpie's  Resolution  ;  Seizure  of  Trust  Goods,  Sen.  Mis. 
No.  18,  1890. 

U.  S.  Debates,  Sherman's  Bill,  1889  (No.  3445),  20  Cong. 
Rec.  (1889),  pp.  1120,  1167,  1456. 
Sherman's  Bill,  1890  (No.  1),  Cong.  Rec.  Feb.  28,  1890, 
pp.  1797-1803. 

U.  S.  House  of  Representative  Bills,  Session  of  1889-1890, 
Nos.  91  (McRae,  Ark.),  179  (Stewart,  Ga.),  202, 
(Fithian,  111.),  270  (Henderson,  la.),  286  (Conger, 
la.),  313  (Lacey,  la.),  402  (Blanchard,  La.),  509 
(Anderson,  Miss.),  811  (Enloe,  Tenn.),  826  (Rich- 
ardson, Tenn.),  830  (Pierce,  Tenn.),  846  (Stewart. 
Tex.),  3294  (Breckinridge),  33-53  (Lester,  Va.),  3819 
(Lane,  111.),  3844  (Perkins,  Kan.),  3925  (Abbott, 
Tex.). 

Notes  on  current  events  within  the  Trusts  are  given  in 
Bradstreet's,  Dun's  Review,  and  the  Financial  and  Com- 
mercial Chronicle. 


A  =  Price  of 
a.  Orcanizatii 


een  A  and  B  —  cost  of  refining  plus  profits. 


THE    SlVlAIi    I'OMllIXr 

=...  ,__. 

--■1  ■ 

.    .   1     .       1     .   .   ,     .       1                                                                      ....   I.,.-.I 

Mr  ... 



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J 

3- ... 

.;;_xi~^:.?y^-^-.^^li^,  - 

-^ 

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; 

— 

'■'"'  1  '■'■■•  1  '""■■  1  ""■"  1  '""  1  ' 1  '"■•■  1  ' 1  '"■" 

li:,l 

Ci.U 

.■1  anil  n  =  CHSt.  f>f  refining  plus  profits. 


spirits  derived  from  one  bushel  of 
fiallon,  by  the  yiehl  in  iralhnis  from 
the  profits.  For  iiiucli  of  ilie  time 
11  the  profits. 


THE    WHISKEY  COMRFNE. 


JSS4  JSS5 


H 


-t\ I I- 


Averase  montlily  prir.>  of  com  ikt  Imslirl  at  Peoria.  III.  B  =  Avi'mge  nimttlilv  price  of  Bpirils  derive.l  frmji  one  buahel  ■ 
com  (obuiined  by  miilliplyiiiu  llic  vnliii-  of  one  pnllnii  of  spirils,  Ipks  the  tnx  of  S.ftO  pf  r  pallon,  by  ihe  yield  in  jrallons  fro 
one  biiHliel  of  coni).  The  epnev  bolwccn  the  lines  represents  the  coal  of  production  plus  the  profits.  For  much  of  the  tin 
U'foru  tho  fornmlioii  of  tho  tniHt,  RSBessinenta  for  export  expenses  must  bo  deducted  from  llie  profits. 


'"> 


HONEST    MONEY. 

By  ARTHUR   I.   FONDA. 

i2mo,  cloth,  fi.oo. 


A  work  dealing  in  a  rational  and  common-sense  way  with  the  requirements 
of  an  honest  money,  criticising  the  merits  and  defects  of  various  proposals  for 
its  betterment,  with  an  outline  of  a  new  monetary  system  that  seems  to  meet  the 
requirements  and  correct  existing  faults. 


LABOUR 


POPULAR    WELFARE, 

By  W.  H.  MALLOCK, 

Author  of  "Is  Life  Worth  Living?"  "Social 
Equality,"  Etc. 

Second  Edition,  i2mo,  cloth,  90  cents. 


"  This  new  edition  of  Mr.  W.  H.  Mallock's  famous  work,  now  published  in 
a  much  cheaper  form,  will  be  heartily  welcomed.  The  author's  theories  are  his 
own,  and  his  statements  of  fact  may  be  relied  upon  as  accurate.  Few  economic 
writers  have  compressed  so  much  into  so  little  space,  and  there  is  the  advantage 
of  clearness  in  brevity  of  statement.  He  writes  earnestly.  ...  It  is  no  mean 
compliment  to  Mr.  Mallock  that  his  book  is  attacked  by  radicals  and  socialists 
on  the  one  hand,  and  by  conservatives  on  the  other."—  Boston  Daily  Advertiser. 

"  One  cannot  but  recognize  the  earnestness  o(  the  writer,  especially  in  the 
directions  of  making  his  book  practical;  and  we  are  more  deeply  impressed  with 
his  words,  perhaps,  because  he  is  in  no  way  an  extremist.  He  writes  from  the 
standpoint  of  a  radical,  not  as  an  agitator,  and  he  states  his  arguments  and  con- 
victions forcibly  and  clearly."  —  Detroit  Free  Press. 


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THE 

American  Commonwealth. 

By  the  Right  Hon.  JAMES  BRYCE,  D.C.L., 

Author  of  "  The  Holy  Roman  Empire,"  M.P.  for  Aberdeen. 

Third  Edition,   Revised   Throughout.      In   Two  Volumes 
Large  i2mo,  $4.00,  net. 


This  new  edition  has  been  practically  rewritten,  and  not  only  have  all  difficult 
and  controverted  points  been  reconsidered,  but  in  every  possible  way  the  infor- 
mation given  is  brought  up  to  date.  All  statistics  have  been  carefully  corrected 
by  the  latest  official  records,  and  constitutional  changes  in  the  States  since  1889 
have  been  (so  far  as  possible)  noted. 

Four  entirely  new  chapters  are  added,  in  which  the  author  discusses  The 
Tammany  Ring  in  New  York  City,  The  Presetii  and  Future  of  the  Negro, 
The  South  since  the  War,  and  The  Home  of  the  Nation. 

In  the  new  material  Mr.  Bryce  enters  quite  fully  into  recent  politics,  takes 
note  of  the  issues  of  the  last  Presidential  campaign,  the  effects  of  public  opinion 
on  such  questions  as  the  Force  bill,  the  tariff,  the  silver  question,  in  deciding  the 
elections,  the  relations  of  the  political  parties  to  each  of  these  topics,  discusses 
at  some  length  the  growth  of  new  parties,  and  comments  on  the  Hawaiian  trou- 
bles, new  aspects  of  the  agitation  for  female  suffrage,  etc. 

The  changes  in  the  financial  position  of  the  Nation  are  commented  upon,  and 
the  menacing  attitude  of  Labor  in  recent  years  as  shown  in  the  Homestead  Riots 
of  1892  and  the  Railroad  Strikes  in  the  present  year.  Attention  is  called  to  the 
dangers,  on  the  one  hand,  of  a  constant  influx  every  year  of  half  a  million  of 
untrained  Europeans,  and  on  the  other  of  the  growing  influence  of  wealth  over 
the  country,  and  such  sinister  results  as  "  combines,"  huge  corporations,  etc., 
which  are  able  to  crush  competition,  and  even  influence  legislation. 

On  the  other  hand,  something  is  said  hopefully  of  the  efforts  of  municipal 
reformers  to  purify  politics,  and  of  the  revolt  of  the  better  portion  of  the  com- 
munity in  its  effort  to  repress  Rings,  to  minimize  the  action  of  the  Machine,  and 
overthrow  the  Rule  of  the  Boss. 


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IN  PREPARATION. 

INDUSTRIAL    COMBINATIONS    AND 
COALITIONS 

IN   THE 

UNITED     STATES. 

By   ERNST   VON   HALLE, 
lamo,  cloth. 


Dr.  von  Halle's  work,  on  "  Industrial  Combinations  and  Coalitions  in  the 
United  States,"  deals  with  an  interesting  and  important  subject.  The  scope  of 
the  work  may  be  indicated  by  enumerating  a  few  of  the  combines,  in  their 
broader  sense,  the  author  briefly  touches  upon,  —  such  as  the  Standard  Oil 
Trust,  the  Cordage  Trust,  Railway  Pooling,  Steamship  Line  Combines,  Pork- 
Packing,  Brewing  and  Distilling  Combines,  School  Book,  Wall  Paper,  and 
Playing  Card  Trusts,  the  Steel  Trade  Combine,  the  Western  Union  Telegraph 
System,  General  Electric  Companies  Trust,  Express  Service  Combines,  besides 
Gas  and  Water,  and  Postal  Service,  Copyrights,  Patents,  etc.  The  author's 
point  of  view  is  not  controversial,  but  elucidatory  and  impartial,  —  seeking  not  to 
take  sides  for  or  against  "  Combines,"  still  less  to  pass  judgment  upon  them  from 
a  moral  standpoint.  He,  of  course,  holds  up  to  view  their  evils,  —  economical 
and  political,  —  but,  on  the  other  hand,  he  points  to  their  manifest  industrial 
advantages.  He  shows  how  legislation  has  opposed  them  and  sought  to  hold 
them  in  check,  and  he  quotes  both  statutes  and  the  decisions  of  jurists  as  re- 
pressive measures.  Reference  is  also  made  to  Trusts  and  their  relation  to  the 
Stock  market;  while  the  subject  is  briefly  considered  as  the  outcome  of  a  sys- 
tem of  Protection.  Here,  as  throughout,  the  author  does  not  take  sides,  but  con- 
tents himself,  in  the  main,  with  a  survey  of  facts.  So  neutral  is  the  author,  and 
averse  from  bias,  that  while  he  writes  of  monopolies  as  "  despoilcrs,  oppressors, 
and  impoverishers,"  he  at  the  same  time  commends  them,  as  among  the  blessing-. 
of  civilization,  in  giving  encouragement  to  the  invention  and  improvement  of 
machinery  and  to  the  vast  array  of  modern  l.ibor-saving  processes  which  the  age 
—  even  an  age  of  combines  and  trusts —  has  produced. 


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THE  UNITED  STATES. 

/In  Outline  of  Political  History,  7492-1871. 

By  GOLDWIN  SMITH,  D.C.L. 
i2mo,  cloth,  $2.00. 


"  Considered  as  a  literary  composition,  the  work  can  scarcely  be  too  highly 
praised.  It  is  a  marvel  of  condensation  and  lucidity.  In  no  other  book  is  the 
same  field  covered  so  succinctly  and  so  well.  .  .  .  Almost  every  page  is  enriched 
with  striking  comments  that  cause  the  reader  to  carefully  reconsider,  if  not  to 
change,  his  views  of  many  historical  persons  and  events."  —  T/ie  New  York  Sun. 

"  The  opinions  advanced  by  Professor  Smith  are  ...  in  the  main  in  harmony 
with  those  of  our  best  authorities,  and  the  treatise  as  a  whole  has  a  comprehen- 
siveness of  view  and  a  ready  grasp  of  leading  tendencies  that  should  make  it  par- 
ticularly useful  to  the  busy  man  who  desires  a  rapid  survey  of  American  political 
history.  By  deliberately  neglecting  details  Professor  Smith  has  been  able  to 
fasten  attention  upon  salient  points  and  to  concentrate  interest  around  the 
careers  of  the  great  leaders  in  our  political  development.  .  .  .  It  is  safe  to  assert 
that  Americans  as  well  as  Englishmen  will  welcome  Professor  Smith's  book  and 
rejoice  in  its  noteworthy  fairness  and  lucidity."  —  T/te  Beacon. 

"  The  history  of  the  United  States  is  now  told  for  us  in  the  more  attractive  form 
and  with  all  the  advantages  of  the  marvellous  power  of  condensation  and  the 
brilliance  and  picturesqueness  of  style  which  characterize  Mr.  Goldwin  Smith's 
writing.  The  pages  are  filled  with  sentences  which  stimulate  thought,  with 
happy  phrases,  with  vivid  pictures  of  men  and  of  situations  drawn  with  a  few 
bold  strokes.  ...  A  volume  of  absorbing  interest,  worthy  to  be  ranked  with 
the  best  work  of  a  great  master  of  the  English  language." —  T/ie  Toronto  Globe. 

"  The  author  has,  as  those  who  know  him  do  not  need  to  be  told,  a  style  which 
is  nothing  less  than  fascinating,  and  a  delightful  literary  flavor  pervades  all  his 
work.  The  book  is,  of  course,  a  marvel  of  condensation.  Considered  merely  as 
a  literary  composition  it  would  command  high  praise.  Its  lucidity,  its  graphic 
narration,  and  its  constant  avoidance  of  even  an  approach  to  dulness  are  quite 
as  remarkable  as  its  incisiveness  of  judgment  and  originality  of  view.  .  .  .  Asa 
whole  the  book  is  remarkably  free  from  errors." — T/ie  Providence  Sunday 
yournal. 


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SOCIAL  EVOLUTION. 

By  BENJAMIN    KIDD. 

NEW     EDITION,    REVISED,    WITH    A     NEW    PREFACE 
lamo,  cloth,  $1.50.    Also  cheap  edition  in  paper  covers,  25  cents. 


"  The  name  of  Mr.  Benjamin  Kidd,  author  of  a  very  striking  work  on  '  Socia\ 
Evolution,'  is,  so  far  as  we  know,  new  to  the  literary  world;  but  it  is  not  often 
that  a  new  and  unknown  writer  makes  his  first  appearance  with  a  work  so  novel 
in  conception,  so  fertile  in  suggestion,  and  on  the  whole  so  powerful  in  exposition 
as  '  Social  Evolution  '  appears  to  us  to  be,  ...  a  book  which  no  serious  thinker 
should  neglect,  and  no  reader  can  study  without  recognizing  it  as  the  work  of  a 
singularly  penetrating  and  original  mind." —  The  Times  (London). 

"  It  is  a  study  of  the  whole  development  of  humanity  in  a  new  light,  and  it  is 
sustained  and  strong  and  fresh  throughout.  ...  It  is  a  profound  work  which 
invites  the  attention  of  our  ablest  minds,  and  which  will  reward  those  who  give  it 
their  careful  and  best  thought.  It  marks  out  new  lines  of  study,  and  is  written  in 
that  calm  and  resolute  tone  which  secures  the  confidence  of  the  reader.  It  is 
undoubtedly  the  ablest  book  on  social  development  that  has  been  published  for  a 
long  time." —  Boston  Herald. 

"  Those  who  wish  to  follow  the  Bishop  of  Durham's  advice  to  his  clergy  — '  to 
think  over  the  questions  of  socialism,  to  discuss  them  with  one  another  reverently 
and  patiently,  but  not  to  improvise  hasty  judgments  '  —  will  find  a  most  admira- 
ble introduction  in  Mr.  Kidd's  book  on  social  evolution.  It  is  this  because  it  not 
merely  contains  a  comprehensive  view  of  the  very  wide  field  of  human  progress, 
but  is  packed  with  suggestive  thoughts  for  interpreting  it  aright.  .  .  .  We  hope 
that  the  same  clear  and  well-balanced  judgment  that  has  given  us  this  helpful 
essay  will  not  stay  here,  but  give  us  further  guidance  as  to  the  principles  which 
ought  to  f;overn  right  thinking  on  this,  the  question  of  the  day.  We  heartily 
commend  this  really  valuable  study  to  every  student  of  the  perplexing  problems 
of  socialism." —  T/ie  ChttrchmaH. 


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